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Bain's US LBM Buy, BFS-BMC Merger Assure 2020 Will Be a Record Year in M&A Dollar Terms

Updated: Nov 15, 2020

LBM facilities involved in deals (blue pins), openings (green) and closures (red) in 2020. Source: Webb Analytics

Billions of dollars are expected to change hands next month as we near the end of what is shaping up to be a momentous year in LBM mergers and acquisitions. The Webb Analytics tallies to date don't show that yet: We're at 244 facilities involved in deals, openings, and closures so far this year vs. 211 at this point in 2019. The difference lies in two mega-transactions under way.

The big news involves US LBM, which announced Nov. 13 it had signed a definiitve agreement in which Bain Capital would take a majority interest. US LBM has nearly 300 locations in 32 states and recorded $3.5 billion in sales in 2019. Perhaps it was with knowledge that Bain was coming in that US LBM on Nov. 2 announced one of the year's biggest acquisitions, taking over Zeeland (MI) Lumber, No. 46 on the latest ProSales 100 with $118.1 million in 2019 sales.

Then, late on Nov. 15, Foundation Building Materials (FBM) revealed that an affiliate of the private equity firm American Securities LLC had purchased it in an all-cash transaction. At $19.25 per share, the deal was worth $1.37 billion. FBM's stock price closed Nov. 13 at $15.16 per share, so the purchase represents a 27% premium. Once the transaction is closed, FBM will stop being a publicly traded company.

FBM ranked ninth on this year's ProSales 100 with 2019 sales of $2.15 billion and more than 170 branches across the United States and Canada. But since then, this specialist in drywall and steel studs has suffered because the coronavirus pandemic has hurt two key markets for FBM: commercial and multifamily construction. As a result, its sales for the four quarters ended Sept. 30 have fallen 5.1% to $2.05 billion.

This appears to be the only holding in a dealer that New York-based American Securities will have in its portfolio. It also owns the Henry Co., a manufacturer of roofing and building envelope products.

That news comes on top of plans for BMC and Builders FirstSource to merge, ultimately taking the BFS name. The plans are being reviewed by federal antitrust attorneys now, so we don't know yet whether that merger's impact on the deals map will show up late this year or early in 2021.

The 2020 actions that we can count includes 177 locations involved in acquisitions (they're the blue pins in the map above), 45 greenfield openings (green pins), and 22 closures (red pins). That compares with the 181 facilities in deals, 95 greenfield openings, and 35 closures by this point in 2019. That said, it also should be said that last year's biggest deal--SRS Distribution's acquisition of the 41-unit Florida Irrigation Supply--took place on Nov. 22, 2019.

As usual, SRS Distribution has been among the most active companies this fall. In September, it announced the acquisition of RSI Building Products, a specialty dealer with five locations in Louisiana plus one in Dallas, and on the same day it revealed its purchase of CB Wholesale Inc. of Bellingham and Burlington, WA.

On Oct. 2, SRS' Heritage Landscape Supply Group acquired Aquarius Supply, a landscaping products specialist with four branches in New Jersey, two in Virginia, two in Pennsylvania, and one each in Delaware and Maryland. Heritage returned to the news on Oct. 30 with its purchase of Irrigators Supply, based in McKinney (SRS' headquarters city) and Denton, TX. And that same day, SRS bought C.C. Supply, a roofing specialist with three facilities in Ohio.

In other action:

  • Hawaii's Honsador, a unit of Canwel, bought Island Truss, the only truss manufacturer on the island of Kauai.

  • TW Perry acquired Peoples Supply, whose single location is in Hyattsville, MD, close to the District of Columbia line.

  • Builders FirstSource bought Kansas City Building Supply, based in Overland Park, KS.

  • Pleasant River Lumber, a timber mill, bought Ware-Butler Lumber, a dealer with three locations in Maine.

  • Nation's Best Holdings, a Texas-based dealer that enjoys an equity investment from Do it Best, did two deals. In November, it bought Connolly's Do it Best Hardware, a five-store chain located in Do it Best's headquarters city of Fort Wayne, IN. And one months earlier, it acquired Simms Lumber of Weatherford, TX, and Simms' MetroWest Transload unit, based in Cresson, TX.

  • Nabor's Do it Best Home Center purchased C&D Lumber of Amory, MS.

  • Canada's All-Fab Group bought Littfin Truss of Winsted, MN.

  • US LBM's Universal Supply division opened a new store in Manchester, CT, while its Raymond Building Supply division opened a store in Lakeland, FL.

  • ABC Supply opened a new branch in Concord, NC.

  • Carter Lumber's Carter Kitchen + Bath design center set up shop in Louisville, KY.

  • Sparr Building & Farm Supply opened in Dunnellon, FL, after purchasing a site that became available when Nichols Supply closed.

  • Gordon Lumber is scheduled to close its yard in Port Clinton, OH, around Oct. 31.

  • SRS Distribution has leased 26,400 square feet of industrial space in Oklahoma City, The Oklahoman newspaper reports.

  • Spend $2.85 million and you can buy an unnamed combination lumberyard, garden center and hardware store somewhere in Alabama that claims $5 million in annual revenue and $617,000 in cash flow. The selling price includes $1.4 million worth of inventory and $400,000 of FF&E.

  • An unnamed Arkansas company that bills itself as a "Covid-Proof Retailer of Metal, Lumber, and Hardware" is on sale for $883,000. The price includes $250,000 in inventory and $63,000 worth of equipment. It claims $1.09 million in annual gross revenue and $129,000 in cash flow.

  • An unidentified lumber yard in New York State with $6.2 million in gross revenue is for sale . Its asking price of $1.8 million included $600,000 worth of real estate and $500,000 of FF&E but excludes $650,000 worth of inventory.

  • The Lumber Barn in Goshen, NH, is for sale for $465,000. The Lumber Barn in Bradford remains in business.

  • An unidentified hardware store in Texas has put itself up for sale. It has annual gross revenues of $1.9 million and EBITDA of $178,000. No asking price was listed.

  • There's an unidentified lumber yard and hardware store in San Bernardino County, CA, for sale. It has cash flow of $1.35 million, and $1.3 million in inventory. The asking wasn't disclosed.

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