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Report: Builders FirstSource to Buy ProBuild for $1.5B

Sources tell Reuters that transformational deal is in private talks now.

If a rumored deal gets inked, the building materials industry could see one of the biggest M&A deals in 2015 – and further the sector's rampant consolidation.

Builders FirstSource, Dallas, TX, plans to purchase ProBuild Holdings Inc., Denver, CO, for $1.5 billion, according to a recent report from Reuters, which cited "people familiar with the matter."

"The negotiations between Builders FirstSource and privately held ProBuild are ongoing and may not lead to an agreement, the people said. Other bidders for ProBuild could also emerge, they added," the report read.

Builders FirstSource has been acquisitive of late, completing two acquisitions – Trim Tech of Austin and Empire Truss Ltd. – during the fourth quarter and a total of five since the middle of last year. The company reported sales for 2014 of $1.6 billion, up 7.7 percent over the previous year. Profit for the building products company was $18.2 million, compared to a year-ago loss of $42.7 million.

ProBuild Holdings had estimated annual sales of $4.3 billion in 2014, and it operates more than 400 lumber and building product distribution, manufacturing and service centers in 40 states.

Both firms have private equity backing. Builders FirstSource is partially owned by Warburg Pincus LLC and JLL Partners. And private equity firm Devonshire Investors formed ProBuild in 2006 after nine years of owning and expanding the Strober Organization brand of building material suppliers.

The deal would jumpstart a relatively tepid M&A market that was expected to flourish in 2015 thanks to aggressive buyers with loads of capital and willing targets with high valuations.

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