CD&R Buys “Significant” Stake in Foundation Building Materials - Modern Distribution Management

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CD&R Buys “Significant” Stake in Foundation Building Materials

Fellow private equity firm American Securities, which acquired FBM in 2021, retains a majority stake in the distributor.
Foundation Building Materials

Clayton, Dubilier & Rice — the private investment firm behind numerous major acquisitions in the distribution sector over the past decade — has purchased a “significant” ownership position in Foundation Building Materials (Santa Ana, CA), which was No. 12 on MDM’s 2023 Top Building Materials/Construction Distributors List.

The ownership stake was acquired from fellow private equity firm American Securities, which will continue to own a majority stake in FBM.

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Founded in 2011, FBM is a distributor of specialty building products that operates in over 300 locations and serves a diverse customer base of more than 40,000 residential, non-residential and specialty contractors and homebuilders throughout the United States and Canada. 

FBM’s products include gypsum wallboard, suspended ceiling systems, metal framing and other construction materials. In 2021, FBM was acquired by American Securities and has since grown organically and through strategic acquisitions, including its combination with Beacon’s interior products and insulation businesses. 

“CD&R has a longstanding track record of investing in and growing market-leading building products distribution companies like ours with an approach to value creation that is very much aligned with FBM’s guiding values and operating principles,” FBM President and CEO Ruben Mendoza said in a Jan. 31 news release. “American Securities has been a trusted partner to FBM, and shares in the broader FBM team’s excitement to have CD&R on board as we deepen our commitments to our FBM colleagues and customers and continue to build a successful business over the long-term.”

“We have long admired FBM and have tremendous respect for the business Ruben and his team have built,” added Nate Sleeper, CEO of CD&R. “We look forward to supporting FBM through its next phase of growth and to partnering with American Securities.”

As part of the transaction, three CD&R professionals will join FBM’s Board of Directors. CD&R’s investment in FBM was completed on January 30, 2024.

Debevoise & Plimpton LLP served as legal counsel to CD&R, and Weil, Gotshal & Manges LLP served as legal counsel to American Securities on the transaction. RBC Capital Markets LLC served as financial advisor to FBM.

“We are confident this partnership with CD&R represents a compelling next step in the ongoing evolution of FBM and accelerates the company’s growth course,” said Kevin Penn, a Managing Director of American Securities. “In recent years, the company has made significant progress towards achieving key strategic priorities, including investing in a new e-commerce platform and digital application to facilitate enhanced service for customers, and is well-positioned to build on this momentum.”

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