Billionaire Grainger Emerges as Shares Surge on Housing

W.W. Grainger Inc. (GWW), a Lake Forest, Illinois-based hardware supply distributor whose shares reached a record high Friday, has manufactured a new billionaire.

David W. Grainger, 85, is the company’s largest individual shareholder and has a net worth of about $1.2 billion, according to the Bloomberg Billionaires Index. Grainger owns about 6.4 percent of the operation, or 4.4 million shares, according to a regulatory filing with the U.S Securities and Exchange Commission. The shares, which he owns directly and through various family trusts, are valued at more than $950 million.

He also controls another 980,000 shares held by The Grainger Foundation Inc., which are not included in his net worth calculation, according to the Bloomberg ranking. The octogenarian has collected more than $200 million in dividends and proceeds from stocks sales since 1980.

“They’re one of the largest players in the general industrial distribution business,” Derek Jose, an equity analyst at Longbow Research LLC said in a phone interview from his office in Cleveland, Ohio. “Grainger picked up the market share of smaller competitors in a slowing environment.”

The company’s shares have doubled since September 2010, amid a resurgent housing market in the U.S. Grainger generated $9 billion in revenue last year, up 11 percent from 2011, selling lighting and electrical products, power and hand tools, and pumps and plumbing supplies at 368 branches in the U.S., according to the company’s annual report. It employs 20,000 workers worldwide.

A W.W. Grainger distribution center. Courtesy W.W. Grainger Inc. Close

A W.W. Grainger distribution center. Courtesy W.W. Grainger Inc.

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A W.W. Grainger distribution center. Courtesy W.W. Grainger Inc.

Engineering Donation

In the fall of 2010, the billionaire donated about 1 million shares to his foundation. Last week, the charitable group pledged $100 million to the University of Illinois at Urbana-Champaign to support the school’s College of Engineering.

The gift was made in memory of William W. Grainger, the company’s founder and billionaire’s father, the school’s chancellor said in a statement. The elder Grainger graduated from the university in 1919.

Part of the gift will create an endowment for chairs and professorships at the engineering school, which has more than 10,700 enrolled undergraduate and graduate students. The foundation had more than $200 million in assets in 2011, according to a U.S. Internal Revenue Service filing.

Excessive Pay

The company agreed to pay $70 million in December to resolve U.S. allegations it submitted false claims under contracts with the General Services Administration and the U.S. Postal Service.

The GSA discovered through an audit that Grainger hadn’t given accurate or complete information to government purchasers, causing the U.S. to pay excessive amounts for the company’s products, the Justice Department said Dec. 26 in an e-mailed statement.

“Grainger maintains it complied with the disclosure requirements and the contracts in all material respects, and the settlement does not contain any admission of wrongdoing by the company,” the company said in the statement.

Joseph Micucci, a company spokesman, said the billionaire declined to comment on his net worth.

To contact the reporter on this story: David De Jong in New York at ddejong3@bloomberg.net

To contact the editor responsible for this story: Matthew G. Miller at mmiller144@bloomberg.net

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