By Sonja Elmquist & Zachary R. Mider
Craig Bouchard, co-founder of steelmaker Esmark Inc., is close to announcing a deal to buy HD Supply Inc.’s pipe and valve distribution unit for about $500 million, said people with knowledge of the matter. Bouchard plans to combine the business with his steel distributor, Shale-Inland, said the people, who spoke on condition of anonymity as the transaction hasn’t been disclosed. TowerBrook Capital Partners LP, a New York-based private equity firm, is investing in the combined company and will have a majority stake, the people said.
The purchase gives Bouchard and TowerBrook a business that sells industrial pipe, valves, and fittings for use in oil refineries and power plants, with revenue of $569 million in the year ended Jan. 30, 2011. Bouchard, 58, and his brother James built Esmark into the fifth-biggest U.S. steelmaker through acquisitions before selling it in 2008.
Bouchard founded Schiller Park, Illinois-based Shale-Inland in 2010. Shale-Inland’s products include bumpers for Ford Motor Co. vehicles and lids for cooking pans.
Quiana Pinckney, a spokeswoman for HD Supply, didn’t respond to a request for comment outside regular business hours. Gemma Hart, an outside spokeswoman for Towerbrook, declined to comment. TowerBrook is the former buyout arm of billionaire George Soros’s hedge fund firm. Spun off in 2005, the firm and manages about $4.5 billion now, according to its website.
The Bouchards, sons of workers at Inland Steel Co., founded Esmark in 2003 and built it through acquisitions, including the hostile takeover of Wheeling-Pittsburgh Steel Corp. OAO Severstal, Russia’s largest steel producer, bought Esmark for $775 million in 2008.
HD Supply, based in Atlanta, is the former wholesale distribution arm of Home Depot Inc. (HD) Private-equity firms Bain Capital LLC, Carlyle Group LP and Clayton Dubilier & Rice LLC, bought the company for $8.5 billion in 2007.
Deutsche Bank AG is advising HD Supply on the planned sale, the people said, and General Electric Co.’s (GE) GE Capital unit is providing financing to the buyers.
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