Stock and BMC sell a merger
Pointing to charts with headlines such as “Compelling Strategic Combination” and “Highly Attractive Financial Profile,” executives from Stock Building Supply and BMC spelled out the advantages to their blockbuster merger plans during a investors call this week.
The two companies announced plans for a merger on Wednesday morning, describing the creation of a national building materials distribution platform with more than $2.7 billion in combined sales.
Announcment of the Stock-BMC deal follows less than two months a similar combination of even larger companies: Builders FirstSource and ProBuild Holdings.
Some of the positive factors that were described by Buidlers FirstSource during its acquisition announcement were also present in the Stock-BMC discussion. For instance, advantageous timing relative to the housing market recovery, and also a highly complementary footprint.
BMC brings strong presence in attractive markets in the West, Texas and the Southeast, while Stock -- which has roots as Carolina Holdings -- brings significant presence in the mid-Atlantic states. (See map.) With the merger, presence increases from 21 to 42 metropolitan areas. And the locations in 17 states represent 63% of 2014 single-family building permits.
As for timing, BMC and Stock referred to the housing starts data showing the long term average of annual housing starts at 1,449,000 -- well above the figure recorded in each of the last seven years. That data sets the stage for a “leading building products distributor well positioned to grow profitably through the U.S. housing recovery and beyond.”
The Stock-BMC merger, expected to close in the fourth quarter of 2015, would propel the new entity to the number-two spot among LBM distributors, a distant second to the coimbined ProBuild and Builders FirstSource.