The owner of ProBuild, the nation's largest full-service lumberyard, is taking formal steps to sell the company, numerous sources have told ProSales.
Devonshire Investors has hired Credit Suisse to create documents regarding a proposed sale that could be circulated to potential buyers starting as early as this month, said the sources, all of whom spoke confidentially. The sources include lumberyard CEOs, investment bankers, private equity firms, and consultants. Many of them are intimately familiar with ProBuild's operations.
Asked about the rumors, ProBuild president Robert Marchbank told ProSales in an interview Dec. 9 that the company doesn't comment on market speculation about its business. He did stress, however, that "ownership is very pleased with the progress we’ve made and the direction we’ve outlined in terms of core products. ... They're committed to the business plan that we’ve put forward, both in the coming year and for our three-year plan."
Devonshire Investors is the private investment arm of FMR LLC. FMR also is the parent of Fidelity Investments, America's second-biggest mutual fund company. Devonshire provided the bulk of the funding and much of the vision that led to the creation of ProBuild in 2006 by merging the Strober Organization--a New Jersey-based dealer it had acquired in 1997--with the Seattle area's Lanoga Corp. The newly created, Denver-based ProBuild finished that year with $6 billion in sales, 506 facilities from Florida to Alaska, and 17,000 employees.
Then the housing crash came and overwhelmed the company, nearly halving its revenues in just three years. It is believed to have posted many hundreds of millions of dollars of losses over the years, but the exact amount of those losses isn't known publicly. One of the few glimpses into the company's finances came in November 2009, when ProBuild confirmed a Reuters report that said Devonshire had spent $345 million just to cover six months' worth of losses at the dealer and might have to pay another $105 million through January 2010 to buttress the operation.
Devonshire's support enabled ProBuild to survive while fellow giants Stock Building Supply and Building Materials Holding Corp. underwent Chapter 11 bankruptcy-law reorganizations. By 2013, ProBuild had recovered to $4.3 billion in sales, but it had roughly 90 fewer branches and 7,000 fewer employees than at its peak. It also had gone through 18 months of self-analysis that led it to conclude it needed to organize itself better and put more emphasis on local decision-making. "We kept trying to put ProBuild on the jersey of everybody and make everybody look the same, but what we began to realize is we’re not all the same," Marchbank told ProSales in an exclusive interview Feb. 5 during the International Builders' Show.
There was unconfirmed speculation that Devonshire has been considering a move regarding ProBuild for several months. News that a formal offer memorandum may be in the works implies a sale could be in the offing.