Pro-Build Holdings has signed a letter of intent to acquire the lumberyard operations of HD Supply, Pro-Build CEO Paul Hylbert told ProSales today, uniting the nation's No. 1 and No. 3 pro sales companies into a $10 billion behemoth.

While confirming the letter of intent was signed, Hylbert said details of the agreement could not be disclosed and were still, in fact, being worked out.

HD Supply's LBM assets became available as a result of a decision by its creator, The Home Depot. to sell the unit to the private equity firms Bain Capital, The Carlyle Group, and Clayton, Dubilier & Rice. HD Supply's diversified construction and maintenance-related units recorded sales of more than $13 billion last year.

HD Supply's LBM operations reflect about 40% of its total, or $4.84 billion worth of sales. Most of that comes from the former Williams Bros. Lumber operations in Georgia and the Cox Lumber yards in Florida. The assets also include a number of truss plants as well as engineered lumber production facilities acquired when HD Supply picked up Forest Products Building Materials.

Denver-based Pro-Build already has operations in the Southeast through its Hope Lumber unit, but it long has aimed to increase its heft in the area. It already has under construction a state-of-the-art robotic truss plant in that region.

Pro-Build recorded $5.4 billion in sales to pros during 2006, according to this year's ProSales 100 list of top dealers. It had 506 locations and 17,000 employees as of the end of last year.

Adding HD Supply to Pro-Build would make the resulting company twice as big as the No. 2 ProSales 100 company, Stock Building Supply. The new Pro-Build would be as big in size as the No. 20 through 100 ProSales 100 companies combined.

Not counting the HD Supply deal, Pro-Build to date has closed on 11 acquisitions in 2007, ranging geographically from Dunn Lumber in Florida to Polar Supply in Alaska. Late this summer, it completed a new $1.5 billion credit facility that represented a 50% increase from its previous credit line. Hylbert told ProSales then that the move would put the dealer in a position to take advantage of more acquisition opportunities.

"It's been a very good year for acquisitions but this is a huge industry," Hylbert told ProSales. "With 9,000 lumber dealers out there and hundreds and hundreds of component plants in the marketplace, it's still very fragmented."

"There are plusses and minuses in this kind of time frame," Hylbert added, referring to the down market, which may have yet completely bottomed out. "We do view the downturn as a opportunity,? Hylbert added. ?We want to come out of the downturn as a stronger company, with a greater share of market and greater geographic range."