DXP Enterprises, Inc. (NASDAQ: DXPE) has announced that it has completed the acquisition of Kappe Associates, Inc. (“Kappe”). Founded in 1946, Kappe is headquartered in Frederick, Maryland and operates out of three locations servicing Maryland, the District of Columbia, Delaware, Virginia, Pennsylvania, Southern New Jersey, and West Virginia.
Kappe is a leading distributor and manufacturers representative of pumps, controls and process equipment focused on serving the water and wastewater industry. DXP funded the acquisition with cash from the balance sheet.
“We are pleased to announce the acquisition of Kappe and start the year with great additions to our water and wastewater growth efforts. We are excited to have Kappe and Hennesy join our DXP family. Each company provides DXP with exceptional sales expertise that will enhance our efforts and ability to collaborate and serve our customers and grow our DXP Water platform. These acquisitions are consistent with our growth strategy and demonstrate our commitment to expanding DXP into the water and wastewater treatment markets as well as maintaining our leading position as the largest distributor of rotating equipment in North America,” commented David Little, Chairman, and Chief Executive Officer of DXP.
The signing of the definitive agreement occurred on February 1, 2024. Sales and adjusted EBITDA for Kappe for the last twelve months ending December 31, 2023, were approximately $25.4 million and $3.8 million, respectively. Adjusted EBITDA was calculated as income before tax, plus interest, plus depreciation and amortization, plus non-recurring items.
“Kappe’s expertise and youthful energy in the water and wastewater markets will complement DXP’s breadth of technical products and services. This transaction will not only allow us to continue with our existing marketing strategies, but also gives us notable talent as we continue to find resources to serve our customers better,” added David Little.
Kent Yee, Chief Financial Officer, stated “We are very excited to welcome Kappe’s talented and hardworking employees to the DXP team. We continue to execute on our strategic priorities and strategy of making acquisitions in markets and business models where we can continue to enhance DXP. Kappe complements our recent focus on water and wastewater acquisitions and provides us with platforms in their respective markets to effectively serve the water and wastewater customer needs and completes our tenth acquisition under our DXP Water efforts. This transaction will be positive for Kappe and DXP’s customers, employees, and shareholders.”
