ABC Supply, the nation's biggest pro-oriented LBM dealer, announced with USG Corp. today that they've reached a deal for ABC Supply to buy USG's L&W Supply distribution unit--the No. 9 dealer on the ProSales 100--for $670 million in cash. The deal--which brings together the largest roofing specialists with one of the country's largest drywall specialty distributors--should close by year-end, the companies said in a news release.
ABC Supply paid roughly 12.9 times L&W Supply's EBITDA--earnings before interest, taxes, depreciation, and amortization--USG executives said in documents prepared for a call with stock analysts today.
ABC President and CEO Keith Rozolis said the purchase "reinforces ABC’s leadership position in building materials distribution, and helps set the stage for our next phase of growth." James Metcalf, the chairman, president, and CEO of USG, said the sale of L&W Supply "is transformative for USG Corporation, enabling us to right-size our balance sheet and accelerate profitable growth."
USG said L&W currently has 136 distribution branches (see screen shot from L&W's website). That's down six from the start of the year, when according to the latest ProSales 100 the Chicago-based business had 142 branches and more than 2,000 employees. It recorded $1.43 billion in sales in 2015, 98% of it to pros.
ABC Supply has been in a neck-and-neck race recently with Builders FirstSource for the top spot among pro-oriented construction suppliers. The Beloit, Wis.-based firm reported $5.9 billion in sales last year, 99% of it to pros, out of 655 branches nationwide staffed by 9,000 employees.
Today's announcement comes a little less than one year after ABC Supply bought the Norandex distribution business in the United States from France's Saint-Gobain. That deal brought to ABC Supply a network of 103 branches where 770 employees generated $393 million in sales in 2014. ABC also has made several smaller purchases too, most recently in May when it acquired the assets of T&C Supply of Flagstaff, Ariz.
Specialty dealers, including those focusing on sales of drywall and steel studs, have been particularly active in mergers and acquisitions this year: Of the 15 most recent deals involving dealers that ProSales has reported since April, 12 of them featured specialty dealers. The biggest occurred on July 6, Superior Plus Corp., the Canadian-based parent of Winroc--No. 14 on the ProSales 100--has entered into an agreement to sell specialty dealer Winroc and the rest of its Construction Product Distribution business to Foundation Building Materials of Tustin, Calif.