Advent International sells DI to TopBuild in $1bn deal

November 2021 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

November 2021 Issue

In a $1bn deal which gives it direct entry into the billion-dollar mechanical insulation market, insulation installation services provider TopBuild Corp. is to acquire North American insulation distributor Distribution International Inc. (DI) from global private equity investor Advent International.

TopBuild, a leading installer and distributor of insulation and building material products to the US construction industry, expects to fund the acquisition using a combination of debt financing and cash on hand.

“The acquisition of DI is highly strategic,” said Robert Buck, president and chief executive of TopBuild. “It aligns with our strategy of seeking well-managed companies with experienced, talented teams with expertise in our core business of insulation and adjacent products. DI provides us with a direct entry and immediate leadership position in the $5bn mechanical insulation market, which is a highly attractive and complementary new growth platform.”

Founded in 1986, DI is a value-added distributor of insulation-related specialty fabricated products, HVAC products and safety supplies in North America. The Houston-based company has over 100 locations and provides its customers with mission-critical products and services across the commercial building, chemicals, energy, power, railcar and marine end-markets.

Moreover, the company has successfully expanded into new product categories, including metal building insulation, broadened its end-market focus in areas such as marine and data centres and developed leading digital tools for its customers.

The transaction is expected to close in the fourth quarter of 2021.

“Over the course of our partnership, DI has cemented its position as the number one distributor and preferred partner for mechanical insulation products in North America through significant investments in M&A, platform expansion, people development and operational effectiveness,” said Stephen Hoffmeister, managing director at Advent International. “We are excited for DI to build on its success as part of TopBuild, which is ideally positioned to support DI’s continued growth and goal of being the best employer in the broader distribution industry.”

A firm with significant investment experience in the industrial sector, since 1990 Advent has invested $12bn in over 80 companies across a range of subsectors, including distribution, building products, packaging, capital goods and chemicals and materials. In addition to DI, Advent’s distribution investments include Rubix, MORSCO, ABC Supply, Bradco Supply and GTM.

“We are proud of what we have achieved working with Advent and are grateful for their support and expertise, which has been instrumental to our growth,” said Steve Margolius, president and chief executive of DI. “As we take this next step, we are eager for the new growth opportunities our partnership with TopBuild offers, underpinned by a strong, shared commitment to people, safety and service.”

The transaction has been approved by TopBuild’s board of directors and is subject to regulatory approval and other customary closing conditions.

RBC Capital Markets, LLC is serving as financial adviser and Weil, Gotshal & Manges LLP is acting as legal counsel to Advent and DI. J.P. Morgan Securities LLC is serving as financial adviser and Jones Day is acting as legal counsel to TopBuild.

Mr Margolius concluded: “We look forward to working with TopBuild to continue our momentum and even better serve the needs of our customers.”

Fraser Tennant