Lowe's Acquires Foundation Building Materials for $8.8 Billion
Foundation Building Materials to Join Lowe's Family
In a significant development, American Securities LLC and CD&R have announced their decision to sell Foundation Building Materials, Inc. (FBM) to Lowe's Companies, Inc. for an impressive $8.8 billion. This strategic move is poised to enhance Lowe's capabilities in the building products distribution sector.
FBM's Position in the Market
FBM stands out as a premier North American distributor of essential interior building products. Their extensive product line includes drywall, metal framing, ceiling systems, commercial doors, hardware, insulation, and other complementary products. The company serves a diverse customer base comprised of large residential and commercial professionals, engaging in both new construction and remodeling projects.
Since its inception in 2011, FBM has experienced remarkable growth, expanding both organically and through strategic acquisitions. They now boast over 370 outlets across North America, effectively serving around 40,000 Pro customers. This impressive network underscores FBM's commitment to delivering top-notch building materials and products.
Growth Fueled by Strategic Acquisitions
The growth trajectory of FBM has been nothing short of extraordinary, with an average revenue growth of 27% per year and an EBITDA growth rate of 31%. This success can be attributed to their aggressive expansion strategy, which has included acquiring key businesses such as Beacon Roofing Supply's interior products division, Marjam Supply Company, Unified Door & Hardware, and REW Materials.
These acquisitions have not only bolstered FBM's competitive edge but have also diversified their product and service offerings. Additionally, FBM has invested in innovative solutions, including the development of a new e-commerce platform and digital applications designed to enhance customer service.
Leadership Insights on the Transaction
Ruben Mendoza, the CEO of FBM, has expressed his appreciation for the collaboration with American Securities and CD&R. He stated, "The support from American Securities has been instrumental in accelerating our growth and enhancing our capabilities. We are grateful for our achievements and enthusiastic about our future as we integrate with Lowe's."
Kevin Penn of American Securities echoed similar sentiments, reflecting on their fruitful partnership with FBM. He highlighted their commitment to transforming the business using strategic mergers and acquisitions (M&A) and to expanding their market presence through new initiatives. Penn noted, "This transaction showcases the power of partnership and teamwork that has driven FBM's exceptional performance."
A Bright Future with Lowe's
As the acquisition process unfolds, key personnel such as John Stegeman, an Operating Advisor to CD&R, have lauded FBM's continuous investment in customer value and organic growth initiatives. Stegeman believes that these enhancements will pave the way for sustained long-term growth.
Tyler Young, a Principal at CD&R, emphasized the strategic significance of FBM within the construction supply industry. He remarked on the robust foundation that FBM has built, projecting confidence about its future success post-acquisition by Lowe's.
The deal, expected to finalize in the fourth quarter of 2025, subject to regulatory reviews, is poised to expand Lowe's footprint in the building materials sector significantly. RBC Capital Markets acted as the exclusive financial advisor, while Weil, Gotshal & Manges LLP served as legal counsel.
About Foundation Building Materials
Founded in 2011 and based in Santa Ana, California, FBM is known for its superior distribution of building materials and construction products. With a keen focus on the professional construction market, FBM remains dedicated to adapting to the changing needs of its clientele.
About American Securities and CD&R
American Securities, headquartered in New York, is recognized as a leading private equity firm targeting North American companies with significant annual revenues. Their impactful investments have contributed to the development of robust businesses across diverse sectors.
CD&R has established its reputation as a notable private investment firm with a commitment to fostering sustainable business practices. Their innovative strategies emphasize long-term growth and operational excellence across various industries.
Frequently Asked Questions
1. What companies are involved in the acquisition?
The acquisition involves Foundation Building Materials being sold by American Securities and CD&R to Lowe's Companies, Inc.
2. How much is the acquisition worth?
The transaction is valued at $8.8 billion.
3. What products does Foundation Building Materials distribute?
FBM distributes a variety of interior building products, including drywall, metal framing, ceiling systems, and commercial doors.
4. When is the acquisition expected to close?
The acquisition is anticipated to close in the fourth quarter of 2025, pending regulatory approvals.
5. What impact will this have on Lowe's?
This acquisition will enhance Lowe's distribution capabilities in building materials, improving service to residential and commercial professionals.
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