Lawson Products Enters Strategic Combination With TestEquity & Gexpro Services

Author: Akanksha Bakshi | December 29, 2021 10:33am

Lawson Products, Inc. (NASDAQ:LAWS) and Luther King Capital Management Corporation's private investment arm LKCM Headwater Investments entered definitive merger agreements.

• Under the agreement, Lawson will combine in an accretive transaction on an adjusted basis with two of LKCM Headwater's portfolio companies, TestEquity and Gexpro Services, in an all-stock transaction.
• All three niche industrial distribution companies will be brought under a holding company, with all three companies operating independently.
• Post-completion, Lawson's capitalization is expected to consist of ~19.4 million shares, of which ~9.1 million or 47%, will be held by existing Lawson shareholders, 3.3 million shares or 17% by the existing owners of TestEquity, and 7 million shares or 36% by the current owners of Gexpro Services.
• Affiliates of LKCM Headwater currently beneficially own 48% of Lawson's outstanding shares. After the combination, affiliates of LKCM Headwater will beneficially own ~75% of Lawson's shares.
• The combined holding company will have an estimated pro forma annual revenue of more than $1 billion and a combined estimated pro forma annual adjusted EBITDA of more than $100 million.
• Lawson Products held cash and cash equivalents of $7.5 million as of September 30. 2021.
• Upon closing the combination, Lawson, TestEquity, and Gexpro Services will continue to be led by their existing senior management teams.
• Price Action: LAWS shares are trading higher by 12.1% at $54.25 on the last check on Wednesday.

Posted In: LAWS