Any major business deal carries with it some risk but, with the economy continuing to experience pockets of turbulence on its way to recovery, Singer Equipment Company's purchasing the assets of M. Tucker Company sent ripples through the foodservice equipment and supplies industry. So what does it all mean for the still-healing industry?
Fred Singer, president and chief executive officer for Singer Equipment Co., an Elverson, Pa.-based foodservice equipment and supplies dealership, thinks the foodservice equipment and supplies industry may be poised to see more deals of this kind. "Companies become available for acquisition as a result of challenging times," Singer said. "This transaction would not have been possible if we had not had several years of very challenging business conditions in this industry."
In fact, Singer's deal to acquire the assets of M. Tucker was the second such deal the industry has experienced in recent months. In late March, Hockenbergs, an Omaha, Neb.-based foodservice equipment and supplies dealership, acquired the assets of Global KES.
With the deal complete, Singer formed Singer NY, a limited liability corporation that will do business in New York under the M. Tucker name. The new division will be part of the same buying groups as the parent company, including NexGen and ABC. (M. Tucker had previously been members of IFED and ABC.) "We are looking to grow the division and create more opportunities for the employees of that division," Singer said. "New York is a great foodservice market. So the opportunity to expand into a dynamic market and have continuous coverage was attractive to us. And having a better footprint to service regional customers was meaningful to us."
And with the M. Tucker team essentially intact, the deal represents a faster way into the market for Singer. "The sales team at M. Tucker has great relationships in the market. We want our customers to know it is a part of Singer but are keeping the M. Tucker name because they associate that name with quality customer service," Singer added.
For Singer Equipment, M. Tucker represented a good fit strategically and geographically because it allowed the dealership to expand its local distribution by adding a contiguous market in New York. "We are not interested in growth for growth's sake, only as it makes sense within our strategic business model," Singer said. "There is a whole class of customers that will be newly interested in the new distribution solutions that Singer and Singer NY can provide. We can provide next day delivery from Connecticut to northern Maryland, and that will be significant for some customers. And Singer Equipment has been very strong in heavy replacement equipment and we look forward to bringing that model to our New York division."
So is Singer Equipment still on the acquisition trail? "We would look at other strategic acquisitions and are prepared to do so if they make sense to us. But it will take a little while," said Singer, who added that he did not want to pursue another deal until Singer NY is completely on track. "If I did not do another acquisition for years that would be fine too."