Builders FirstSource, BMC Stock Holdings Announce Upcoming Merger

August 27th, 2020 by Editor

Builders FirstSource, Inc. and BMC Stock Holdings, Inc., have announced they are merging, through a recently signed agreement that will combine the companies in an all-stock merger transaction and creates what the companies call a “premier” supplier of building materials and services.

After a 90-day transition period following the completion of the merger, expected to be later this year or in early 2021, current CEO of Builders FirstSource, Chad Crow, will retire as previously announced and will be succeeded by Dave Flitman, current CEO of BMC, serving as CEO of the combined company.

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,” said Crow. “The transaction is expected to produce tremendous value for the shareholders of both companies through the realization of significant cost synergies, the realization of attractive growth opportunities and the acceleration of technological innovation. Similar to the success of our prior acquisition of ProBuild, we will be poised to capitalize on the strength of our combined platform and the significant upside potential in our key end markets to increase sales, reduce costs and improve cash flow. We are excited about the opportunities ahead and look forward to quickly realizing the benefits of this transaction.”

After the transition, Crow will continue on a consulting basis to the combined company for a period of time to support the integration execution and to ensure an orderly transition.

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. Our customers and associates will benefit from the strengths of our exceptional teams, who share common values and a dedication to providing innovative services and solutions. We believe this compelling combination will enhance our ability to deliver outstanding customer service, generate attractive financial returns and create shareholder value. I look forward to working closely with Chad and the collective management teams of both companies to complete the transaction and further advance our next chapter of profitable growth,” said Flitman.

Under the terms of the agreement, which has been unanimously approved by both companies’ Boards of Directors, 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.

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, N.C. and Denver, Colo.

In addition to the succession of Dave Flitman as CEO of the combined company, the management team will be comprised of leaders from both organizations. Peter Jackson, Builders FirstSource’s CFO, will serve as CFO of the combined company. The transition and integration of the combined company will be led by Jim Major, CFO of BMC and Dave Rush, COO of Builders FirstSource’s East Region, who led the integration team for Builders FirstSource in its ProBuild acquisition.

Upon closing, the combined company’s Board of Directors will have 12 directors, seven from the Builders FirstSource Board of Directors and five from the BMC Board of Directors. Paul S. Levy, co-founder and current Chairman of the Board of Builders FirstSource, will serve as Chairman of the Board of Directors of the combined company.

We are excited to join forces with BMC. We started Builders FirstSource in 1998 with an ambitious vision, and the combination of these two exceptional companies represents another significant milestone, further enhancing value for all stakeholders. Our ability to continue to build our world-class organization exists because of the extraordinary commitment of our many teammates, led through many incredibly dynamic periods by Chad Crow and our prior CEO, Floyd Sherman, and we look forward to continuing that strong legacy of leadership under Dave Flitman. I have full confidence in the unified team to accelerate the success of this larger platform and continue building upon our powerful momentum into 2021 and beyond,” said Levy.

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