Shares of the equipment company Essendant Inc. (NASDAQ:ESND) jumped by over 20% after the company announced today that they would be merging with Genuine Parts Company’s (NYSE:GPC) S.P. Richards business.
According to the company’s release, the deal was unanimously approved by the Boards of Essendant and Genuine Parts.
Together, the two companies, “will form a stronger, more competitive business products distributor with greater scale and service capabilities and an enhanced ability to support customers.”
The transaction gives a value of $680 million to S.P. Richards and approximately $347 million for Essendant.
At the end of the transaction, shareholders of Genuine Parts will own 51% of the combined company, while Essendant shareholders will own 49%. The combined company will be known as Essendant.
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According to Paul Donahue, CEO and President of Genuine Parts, “this transaction is the result of a comprehensive process to maximize the value of S.P. Richards and represents a key step in the execution of Genuine Parts Company’s long-term strategy by enabling [them] to increase our focus on [their] larger, core global automotive and industrial businesses.”
Essendant’s current President and CEO, Ric Phillips, will now be leading the new company, while President and CEO of S.P. Richards, Rick Toppin, will be the Chief Operating Officer.
Phillips has also said, “combining resources, leadership and operational expertise from both [companies], and the unique strengths of both businesses will enhance [their] ability to compete and help [their] customers succeed in the face of a rapidly evolving market.”
Since the market opened this morning, Essendant’s share value reached either nearly or over 20%, to just over USD $10.00.
The shares of Genuine Parts went up nearly 0.30%, to just under $90.00.
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