It sells directly to businesses from a network of about a dozen warehouses in regional or outer-urban areas, and was previously reported by Street Talk to make about $40 million in earnings before interest, tax, depreciation and amortisation annually.
“There’s a strong organic growth story both in terms of natural tailwinds given the sectors and the heightened focus on safety,” Mr Duthie said on Monday.
“There’s also an ability to scale the network nationally and increase it from the 11 sites there now as well as some strong M&A opportunity.”
He said PEP would work with ATOM’s management team to identify bolt-on acquisitions.
“There are a number of family-owned small players that are specialists from the product space or geographic space, and they could in-fill our network nicely,” he said.
ATOM’s major shareholder Mark Bishop, who owned the business for about a decade, had Sydney-based advisory boutique Stanton Road show ATOM to private equity firms and other potential buyers last year.
The company’s chief executive Jason Johnson, another significant shareholder, will remain with the business as both an executive and investor under the new ownership structure, Mr Duthie said.
“Jason and the management team have done a really strong job growing ATOM over the past decade,” he said.
The deal will go into PEP’s buyout strategy, which has been running for about 30 years. It typically seeks to double a company’s earnings in three to five years, and owns similar business-to-business distributors including Modern Star, which sells educational tools and supplies to childcare centres and schools.
PEP director Terry Miu Neeland spearheaded the deal along with buyout fund colleagues Matt Robinson and Shannon Wolfers. Law firm Gilbert + Tobin, PwC and Macquarie Capital advised the private equity group.
