Stock Building Supply Holdings, Inc. and Building Materials Holding Corporation, two leading building materials and solutions providers to professional contractors, announced the signing of a definitive merger agreement under which the two companies will combine in an all-stock transaction. The combined company is expected to have an implied pro forma enterprise value of $1.5 billion, based on Stock Building Supply’s closing price on June 2.
The transaction will create a premier provider of lumber, diversified building products and construction services with over $2.7 billion in pro forma 2014 revenues and enhanced product and service offerings. The combined company will have expanded geographic reach in fast-growing regions across the United States, innovative technology capabilities and deep industry expertise to drive profitable growth and provide leading customer service.
The numerous benefits the combined company is expected to bring to all stakeholders include:
- An enhanced growth, margin and return profile.
- A strong balance sheet and significant cash flow to support long-term strategic growth in a highly fragmented industry.
- Significant and achievable synergy potential rising to $30-$40 million annually within two years.
- An expanded footprint from 21 to 42 metropolitan areas, principally in the fast-growing South and West regions.
- A shared deep commitment to providing solutions to customers while delivering a broad range of quality products and services.
- Projected accretion to Stock Building Supply’s earnings per share in the first full year following close of the transaction.
“We expect this compelling strategic merger will provide significant benefits for customers, shareholders, suppliers and associates of both companies,” says Jeff Rea, president and CEO of Stock Building Supply. “The continuing recovery of the U.S. housing market is expected to generate strong demand for building materials, services and solutions, and together we believe BMC and Stock Building Supply are better positioned to capitalize on this opportunity. Upon close of this transaction, I look forward to continuing on our board to support the combined company and have great faith in the combined leadership team’s ability to create significant shareholder value by accelerating the implementation of our common strategies.”
“We are very pleased to be uniting two leading companies with complementary strategies, products and services; a shared commitment to superior customer experiences; strong internal performance-based cultures and operations in high-demand geographies,” says Peter Alexander, BMC’s CEO. “The combination of our two highly complementary platforms will enhance our ability to provide customers with best-in-class products and services across an expanded geographic footprint. We have great respect for what the team at Stock Building Supply has accomplished and upon close of this transaction, I look forward to leading the combined team as we enter the next exciting phase of our transition and the ability to fund our growth.”
For the full press release, click here.