NEW YORK (The Deal) -- Stock Building Supply (STCK) and Building Materials Holding said Wednesday they would combine to create a $1.5 billion supplier of construction materials, seeking to capitalize on a rebound in the home building market.
Terms of the deal call for Raleigh, N.C.-based Stock Building to issue 0.5231 shares for each share of privately-held Building Materials. At close Building Materials holders will own about 60% of the combined entity, which will be based in Building Materials' hometown of Atlanta and run by current Building Materials CEO Peter Alexander.
Jeff Rea, current Stock Building CEO, will remain on the board of the combination, which will continue to use both brands post-close.
The deal would create a supplier of lumber, building products and construction services with more than $2.7 billion in sales and a presence in 42 metropolitan areas in 17 states focused on the faster-growing south and west regions.
More deals could follow: The companies said they would benefit from "a strong balance sheet" that will support "long-term strategic growth in a highly fragmented industry."
The deal is the second large transaction among construction material suppliers in recent weeks, as companies try to take advantage of a recovery in the U.S. housing market and private owners seek to cash out after buying during the downturn. Builders FirstSource (BLDR) in April said it would acquire privately-held ProBuild Holdings for $1.63 billion.
Building Materials sought bankruptcy protection during the mortgage crisis, exiting Chapter 11 protection in January 2010 under control of its senior lenders. The company is currently controlled by a consortium including Davidson Kempner Capital Management LP, Ravenswood Investment Management and MFP Partners.