Vertical Integration in B2B Distribution
McKesson, Owens & Minor, Advance Auto have transactions in Q3
Hi everyone,
As we finalize our Q3 reports, an interesting trend has emerged: two of the top ten acquisitions last quarter were made by B2B distributors, both within the healthcare sector. McKesson acquired Core Ventures for $2.5B, while Owens & Minor purchased Rotech for $1.4B. These acquisitions highlight an ongoing trend of vertical integration, a strategy we’re seeing across several industries within B2B distribution, from healthcare to metal, food, and building materials. In today’s newsletter, we’ll explore this growing trend and its implications.
Key Examples of Vertical Integration:
• McKesson and Core Ventures
• Owens & Minor and Rotech
• Metals and Industrials
• Grocery and Food
• Building Materials
There are two key components that we see in the vertical integration strategies: providing additional services and/or selling to your customer’s customer. You could do both or one of the two. As we wrote about last week, Amazon Business entering VMI is an example of Amazon Business providing additional services – but still serving the same end-customer.
And, we also have one example of the opposite trend from last quarter – Advance Auto divested their wholesale distribution business.
Let’s dig in!