The two full-line distributors will form an operating alliance to integrate their logistical and support systems. The distributorships will continue to operate as separate units that handle different but overlapping product lines, and existing management will remain in place at both companies.

Royal Scot services the midwest United States through facilities near Chicago, St. Louis and Minneapolis. With distribution centers in major cities throughout Canada, McMahon is the largest Canadian distributor of Kraus carpet and a major distributor of hard-surface flooring products.

Laddie Targosz, president of Royal Scot, said the transaction represents "a vote of confidence" in full-service distribution. "Initially, our customers will benefit from faster logistics and deeper inventories," he explained. "Over time, we'll benefit from the financial strength of being part of a larger group."

Gary Witt, Kraus chief operating officer, noted that the Royal Scot acquisition, geographically speaking, complements Kraus' other U.S. distribution units -- specifically, Sound Floor Covering in the Pacific Northwest and Sorce Inc. in the northeast.

"We don't intend to realign the distribution of any of our commercial carpet brands," added Kraus Chairman and CEO Frank Guthier. "Our objective is to increase our penetration of the American markets that are closest to our home base. Most of Royal Scot's customers are located within 500 miles of the Canadian border."