Builders FirstSource (BFS) announced today it has completed its acquisition of ProBuild, thus creating at $6.1 billion in revenue the biggest pro-oriented lumber and building material supplier in America.
The closing of this deal marks the start of a tumultuous new period in building material supply. BFS already has said it plans to close 19 of the 88 branches in the Southeastern states where it and ProBuild currently operate. There also is wide speculation involving what will happen with operations that are more retail oriented, such as ProBuild's Dixieline stores in San Diego and its Spenard brand in Alaska. The futures of ProBuild's small facilities in the upper Midwest also are likely to get reviewed. Dealers at competing companies report they already are getting inquiries from BFS and ProBuild staffers about job opportunities, and there's wide expectation that some of BFS' closed branches will be taken over by independent firms.
The newly combined BFS/ProBuild can boast of more than 430 locations in 40 states and 74 of the top 100 metropolitan statistical areas across 40 states.
"The culmination of this acquisition marks a significant milestone in our industry, creating a unique company with enhanced scale and a national footprint," Floyd Sherman, BFS' chief executive officer, said in the company's acquisition announcement. "By bringing together the extensive products and services offerings of both Builders FirstSource and ProBuild, we will further strengthen our long-standing customer relationships. "This is an exciting day for our employees as we officially join forces to establish a broader, more efficient platform of manufacturing and distribution capabilities."
BFS financed the deal in part by offering 12 million shares of its stock, 8 million of which were to come from the company and 4 million from Warburg Pincus Private Equity IX, one of BFS' principal shareholders. BFS reported today ended up selling 13.2 million shares and Warburg Pincus 4.6 million shares, all at $12.80 apiece. In addition, BFS said today, it sold $700 million worth of 10.75% Senior Notes due in 2023.
The acquisition is unusual in that, with 2014 revenues of $1.6 billion, BFS is only about one-third the size of ProBuild, whose 2014 revenues totaled $4.48 billion. BFS stands No. 6 and ProBuild No. 2 on the latest ProSales 100 list. Now that they're united, the new BFS moves to No. 1, supplanting ABC Supply, which has revenues of $5.26 billion last year.