Bergman & Beving, Lagercrantz, Nordic B2B Distribution & M&A

Founded in 1906, Bergman and Beving (B&B) has a long history of creating enterprise value. We studied B&B’s legacy 18 months ago:

During the 1890’s, Avid Bergman and Fritz Beving were working in Germany and England in the midst of the industrial revolution. This experience led them to foresee further rapid industrialisation in Sweden. But there was one problem: industrial suppliers didn’t have the local knowledge to sell into the Nordics. In 1906, the two founders created Bergman and Beving (B&B) as the first importer and agent for foreign manufacturers to sell industrial products to Sweden. Over 100 years later, this heritage has created four listed companies that manage hundreds of operating subsidiaries with over $10bn in enterprise value. - In Practise Analysis

B&B started by simply sourcing and reselling industrial goods to Nordic manufacturing companies. Over time, the company added customisation, support, and other ‘value-added’ services to improve profitability. This was the birth of the first value-added distributor, a business model we’ve studied via POOL , WSO, FAST, etc.

We’ve previously covered Addtech and Addlife, two of the three successful B&B spins. This piece is focused on B&B, the $3bn SEK mothership. It presents one of the most interesting ‘serial acquirer’ opportunities we’ve seen in a while.

Part of the reason B&B is relatively attractive today is that it has been messy.

In 2001, B&B spun out Addtech and Lagercrantz separately. Addtech later spun out Addlife, its medical sciences division. After the 2001 spins, B&B renamed itself B&B Tools to focus on tools and supplies for the manufacturing and construction sectors. More importantly, B&B Tools began drifting from its successful roots: it focused on centralisation, not decentralization.

In the early 2000’s, B&B Tools looked to solidify positions in each part of the value chain: designing or owning proprietary brands, owning wholesalers, and rolling out retail stores to sell its products. It began vertically integrating. B&B opened TOOLS retail stores and acquired Momentum group, a traditional reseller of industrial components. The company lost touch with its decentralized roots and aimed to consolidate the highly fragmented northern EU B2B distribution market.