Australian power tool manufacturer GMC is on the selling block as the company battles falling sales, the volatile Australian dollar and high debt levels.
The company is owned by founders Tony D’Antonio and Peter Hosking, who were valued jointly at $270 million on this year’s BRW’s Rich 200, down from $327 million in 2007.
The pair appointed corporate advisory group Kidder Williams to assess options for GMC in July. While a float or capital injection was considered, a trade sale was seen as the best option.
Kidder Williams began distributing information memorandums to prospective buyers late last week.
Tim Faulkner of Kidder Williams says there has been strong interest and expects a relatively quick sale, with a rival tool company such as Ryobi, Bosch or Black & Decker considered the most likely buyers.
“With the intellectual property that GMC has and its brands including GMC and Triton… we think trade buyers will get a lot out of adding GMC to their global distribution channels,” Faulkner says.
Another option could be for one of GMC’s Chinese manufacturing partners to grab a foothold in Australia. “There are opportunities for Chinese manufacturers to come along and buy a brand off the shelf,” Faulkner says.
He says D’Antonio and Hosking would be happy to remain with the company if the new owner wants them.
The pair met at tool company Black & Decker. Shortly after Hosking left that company in 1996, he was asked by a hardware retailer to fill a space in its Father’s Day catalogue. Hosking imported some drills from China and GMC was born.
The company made its name by providing affordable power tools (usually imported from China) for the DIY market. The company’s revenue has grown strongly over the last decade to around $190 million in 2007-08, with around $70 million coming from export sales.
But the company has struggled in recent months after losing its supply deal with the powerhouse of Australia’s hardware retail sector, Bunnings. Increased competition, the strong Australia dollar and a high level of debt is also weighing on the company.
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