After testing the private equity markets last fall, Dallas-based Builders FirstSource (BFS) announced Jan. 18 that it is preparing for an initial public offering (IPO) of its common stock, expected to be completed by the end of June. “We filed the SEC S-1 form on Feb. 14 and are very excited,” says Paul Levy, founding partner of JLL Partners, the New York–based private investment firm that acquired BFS (then Builder's Supply and Lumber Co.) from Pulte Corp. in 1998. Levy says that JLL expects the IPO to be completed by the conclusion of the second quarter but cannot comment further due to quiet-period restrictions imposed by the U.S. Securities and Exchange Commission (SEC).

Since JLL's original investment in the company, BFS has acquired 23 firms in the pro dealer sector, expanding the company's services and market reach to include materials distribution; component manufacturing; door, window, and millwork plants; and stair fabrication across 11 Midwestern and Eastern states. “We have worked closely with management since inception over the last seven years to grow the company,” Levy said in the January announcement. “We will continue to be involved as a large stockholder after the IPO.”

That's a slight departure from last September, when JLL announced plans to divest its interest in BFS via auction to interested parties in the private sector, with possible bidders including big boxes, national pro dealers, or private equity investment firms similar to JLL. At the time, Levy indicated that preliminary interest from the financial community was strong, and a buyer was expected to emerge and purchase the company by year's end. The sale was anticipated to garner approximately $800 million, about seven times projected 2004 EBITDA (earnings before interest, taxes, depreciation, and amortization) for BFS.

In light of the company's recent strong financial performance (BFS reported 2004 sales of $2.05 billion from 88 locations), however, the board of directors for BFS has instead determined that pursuit of an IPO will “maximize value” in the sales process, according to a company press release. “Builders FirstSource has made great strides in performance over the last several years,” commented company chairman and CEO Floyd Sherman in the statement. “We are now positioned to access the public capital markets.”

Prior to filing Form S-1 with the SEC, BFS refinanced existing debt, paid dividends to its stockholders, and made a cash payment to its option holders in lieu of a dividend. If all fares well with the planned IPO, BFS will join San Francisco–based Building Materials Holding Corp. (BMHC) as one of a handful of publicly traded building material suppliers. Other companies of note on the board include London-based Wolseley (the parent company of Raleigh, N.C.–based Stock Building Supply and Newport News, Va.–based plumbing distributor Ferguson), and Atlanta-based building products distributor BlueLinx Corp., which completed its own IPO on Dec. 14 after spinning off from fellow Atlanta-based firm Georgia-Pacific.