Big deal: Builders FirstSource to acquire ProBuild
Builders FirstSource, Inc. a leading supplier and manufacturer of structural and related building products for residential new construction in the United States, today announced that it has entered into a definitive purchase agreement to acquire ProBuild Holdings LLC , in an all-cash transaction valued at approximately $1.63 billion.
The transaction, which was approved by the Builders FirstSource Board of Directors, is subject to customary closing conditions and regulatory approvals and is expected to close in the second half of 2015.
ProBuild was created in 2006 by Devonshire Investors, the private equity firm affiliated with FMR LLC, the parent company of Fidelity Investments. With approximately $4.5 billion in revenue in 2014, ProBuild is one of the largest distributors of building materials to professional builders, contractors and project-oriented consumers in the United States. ProBuild operates lumberyards, component facilities, millwork shops, gypsum yards and retail stores across 40 states. Together, Builders FirstSource and ProBuild will have an enhanced portfolio of products with increased breadth and depth within its categories, including lumber, windows, doors, millwork, hardware, roof and floor trusses, engineered wood products, gypsum, roofing, metal and concrete products, cabinets and countertops. In addition, the combined company will better serve its customer base through its broader scale and operating footprint, enabling it to deliver products and services more effectively and efficiently.
Floyd Sherman, Chief Executive Officer of Builders FirstSource, said, "We are very pleased to announce this compelling combination with ProBuild to create a more diversified company with enhanced scale and an improved geographic footprint that will drive significant value for our customers and stockholders. As the U.S. housing market continues its recovery, we believe now is the ideal time to position Builders FirstSource for its next phase of growth and value creation. Together we will establish a broader, more efficient platform of manufacturing and distribution capabilities, supported by high-quality service from the best talent in the industry. In addition, each of our companies has complementary strengths, and we plan to learn from each other by implementing best practices across the combined company. Builders FirstSource and ProBuild have two of the best sales forces in the industry and share a commitment to enhancing the deep, long-standing customer relationships that each company has cultivated. We look forward to working with the ProBuild team to plan for a seamless integration that will enable us to create exciting new opportunities."
Paul S. Levy, Chairman of the Board of Builders FirstSource and Founder of JLL Partners, said, "Since JLL Partners founded Builders FirstSource in 1998 and took the company public in 2005, we have been intently focused on creating a leading platform that professionalizes the building products industry through a best practices approach to conducting business. We are accomplishing our objective by providing a variety of products and services as well as personalized attention to our customers at the local level, and the combination announced today will significantly advance these efforts across a broader operating footprint. We are confident that the substantial additional resources that ProBuild brings to Builders FirstSource will help drive significant value creation over the long-term."
David A. Barr, Managing Director, Co-Head of Industrial and Business Services, Warburg Pincus, commented, "When we first partnered with Builders FirstSource, we saw significant opportunities for the company to pursue acquisitions in the highly fragmented building products distribution industry. Builders FirstSource has established itself as a leader in its field, and this combination with ProBuild will enable the Company to continue to capitalize on favorable market trends in the housing market."
Watch it: Kuiken Brothers releases showroom video
A video titled “Our Showroom, Your Showroom” presents the Kuiken Brothers approach to serving professional customers and their home owner customers.
The company’s showrooms are described as extensions of the business for builders, remodelers and architects.
The newer show rooms, including the Succasunna, New Jersey showroom featured in the video, are designed around the customer experience and home vignettes, as opposed to stand-alone displays, the company said.
Kuiken Brothers is based in New Jersey where it operates seven locations. It also has a yard in Warwick, New York.
Dealers bring issues to the Hill
Washington, D.C. — National Lumber and Building Material Dealers Association legislative director Ben Gann provided the bullet points for a lumber-industry rallying cry during a Tuesday morning session here at the association's Spring Meeting & Legislative Conference.
Shortly before NLBMDA members spread out across the capitol for meetings with legislators, Gann hammered on the three priority-issue talking points: EPA lead rule reform, the Marketplace Fairness Act, and the NLBMDA's signature issue — the Innocent Sellers Fairness Act.
In regard to the latter, the NLBMDA believes unfounded and unfair lawsuits are a real threat to lumber dealers. Even if these lawsuits are dismissed, it's an expensive proposition to defend against them, Gann said.
Back on Capitol Hill, "innocent sellers" was the first talking point of a small contingent of California dealers making office visits to legislators. Outside the office of Congresswoman Janice Hahn (D-Calif.), J.D. Saunders of Campbell, Calif.-based Economy Lumber pressed a legislative assistant on the three key issues. He was joined in his lobbying by fellow California dealer Sean Fogarty of Osborne Lumber Co. in Newark, California, and his wife Roslyn.
While the California dealers felt they made some headway on the Innocent Sellers bill, they felt some resistance to the Lead Paint Rule reform from the Hahn office.
The lumberyards' talking point was to ask legislators to cosponsor the Lead Exposure Reduction Amendments Act and support reforms to EPA's Lead: Renovation, Repair and Painting program. The law requires renovation work to take certain precautions when disturbing more than 6 square feet of the interior of houses built prior to 1978, or any window and door replacement project.
As the NLBMDA explains it, the rule originally allowed homeowners to waive testing and the use of special work practices if there were no pregnant women or children six years of age or younger living in the home. The opt-out was removed in 2010, making millions of additional houses targets for unnecessary and expensive work, according to the NLBMDA.
Another issue for the dealers is the lack of reliable test kits.
"Like anyone else, we certainly are opposed to lead poisoning, but there at least needs to be a reliable test available," Saunders said.
The NLBMDA's third key issue involves online sales tax fairness. The association encourages the adoption of the Marketplace Fairness Act that grants states the authority to require businesses to collect and remit sales and use taxes on remote sales through a simplified system.
These taxes are already on the books, Gann says — but they're not being collected. That means many online retailers are enjoying a tax advantage over community-based lumberyards.