Builders FirstSource Inc. (Nasdaq: BLDR), Dallas, Texas, and BMC Stock Holdings Inc. (NASDAQ: BMCH), Raleigh, North Carolina, on Thursday announced that they have entered into a definitive merger agreement under which Builders FirstSource and BMC will combine in an all-stock merger transaction valued at $2.5 billion.
The deal unites the No. 2 (BLDR) and No. 5 (BMCH) companies on MDM’s 2020 Building & Construction Top Distributors list.
Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, BMC shareholders will receive a fixed exchange ratio of 1.3125 shares of Builders FirstSource common stock for each share of BMC common stock. Upon completion of the merger, existing Builders FirstSource shareholders will own approximately 57% and existing BMC shareholders will own approximately 43% of the combined company on a fully diluted basis. The merger is expected to be tax free for U.S. federal income tax purposes.
After a 90-day transition period following the completion of the merger, Chad Crow, current CEO of Builders FirstSource, will retire as previously announced and will be succeeded as CEO of the combined company by David Flitman, current CEO of BMC.
Following the transaction closing, the combined company will operate under the name Builders FirstSource Inc. and will be headquartered in Dallas, Texas, while maintaining key functional corporate centers of excellence in both Raleigh, North Carolina, and Denver, Colorado.
Said Crow: “This is a transformational opportunity that unites two outstanding and complementary companies, providing enhanced scale and superior returns as we build upon a new, larger platform. Builders FirstSource and BMC together will have a very diverse portfolio of value-added offerings and greater resources to more closely partner with and serve customers.”
Added Flitman: “We believe this strategic combination of two great organizations is an exciting step forward for both BMC and Builders FirstSource, as well as for our associates, our customers and other key stakeholders. As we accomplished in our prior combination with Stock Building Supply, this transformational merger will enable BMC to further accelerate our profitable growth strategy with a company that also focuses on providing a broad product portfolio and differentiated capabilities deployed through a customer-focused service model.”
Look for more on this deal — including what it means for the building materials category and the synergies the combined company expects to realize — in Friday’s blog at mdm.com.