Two large building supply companies think they can do it better together.

Stock Building Supply Holdings Inc. and Building Materials Holding Corp. (BMC), have signed a definitive merger agreement under which the two companies will combine in an all-stock transaction.

The combined company is expected to have an implied pro forma enterprise value of $1.5 billion based on Stock Building Supply’s closing price on June 2.

The transaction will create a large provider of lumber, diversified building products and construction services with more than $2.7 billion in pro forma 2014 revenues and enhanced product and service offerings.

“We expect this compelling strategic merger will provide significant benefits for customers, shareholders, suppliers and associates of both companies,” says Jeff Rea, president and CEO of Stock Building Supply. “The continuing recovery of the U.S. housing market is expected to generate strong demand for building materials, services and solutions, and together we believe BMC and Stock Building Supply are better positioned to capitalize on this opportunity.”

Upon the closing of the transaction, BMC shareholders will own approximately 60 percent of the merged entity, with Stock Building Supply shareholders owning approximately 40 percent.

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