Lawson Products Enters Strategic Combination With TestEquity & Gexpro Services

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

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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.

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