That consolidation of stores, combined with savings generated from combining delivery routes, will produce one-fifth of the $100 million to $120 million in annual run-rate savings that the combined BFS/ProBuild expects to achieve within two years of the LBM giants' merger, BFS said.
The estimate is part of a prospectus BFS issued in connection with its plans, also announced today, to offer 11 million shares of common stock to help pay for its acquisition of ProBuild, the nation's biggest lumberyard chain and the No. 2 copy on the ProSales 100. BFS, No. 6 on the list, expects the deal to close in August, just four months after first revealing the blockbuster deal.
The share offering carried little impact on Wall Street. BFS shares slipped 1.34% today; they've been trading in the $12 to $14 range ever since the ProBuild deal was announced.
The prospectus noted that BFS had analyzed its and ProBuild's operations in a broad swath of states from the District of Columbia to Texas in which both firms operate. "We believe our combined company’s new footprint will allow us to consolidate 19 redundant sites (out of 88 overlapping locations) and save on associated lease, non-sales related labor and facility maintenance expenses," BFS said. "Estimated savings are based on an assumption that 30% of redundant location’s spend (excluding fleet expenditure) is eliminated."
Here is an interactive map showing those locations:
BFS said it expects even more savings--at least $35 million annually starting in about two years--from improvements in how it procures building materials.
"We we anticipate that the implementation of shared best practices across our $3.6 billion of annual commodity and specialty product spend will lead to optimized pricing and rebates with existing supply relationships," the Dallas-based company said. "We have conducted a stock keeping unit (“SKU”) level pricing analysis across the overlapping geographic regions of the two companies and believe that rationalizing overlapping regions will generate cost savings. In addition, we believe the potential costs savings in non-overlapping geographic regions may be achieved through applying best practices. Lastly, we believe the increased scale of our combined company will provide further pricing discounts on addressable commodity product purchases."