Done Deal: Lowe’s completes $8.8B acquisition of building products distributor
Lowe’s Companies Inc. is making a major investment to strengthen its offerings for home improvement professionals.
The home improvement giant has completed its previously announced acquisition of Foundation Building Materials (FBM), a building materials and construction products distribution company with over 370 locations across the U.S. and Canada.
[READ MORE: Lowe’s makes $8.8B acquisition; grows Q2 profits and sales]
FBM’s product categories include drywall, metal framing, ceiling systems, commercial doors and hardware, insulation and complementary products serving large residential and commercial professionals in both new construction and repair and remodel projects.
Through this acquisition, Lowe's expects to enhance its offering to pro customers through an expanded product assortment, faster fulfillment, improved digital tools, and a trade credit platform.
The retailer also hopes to achieve opportunities to expand its pro footprint resulting from FBM’s complementary presence in key geographies like California, the Northeast and the Midwest. The deal also creates cross-selling opportunities between FBM and Lowe's as well as the recently acquired Artisan Design Group, a a nationwide provider of design, distribution and installation services for interior surface finishes to home builders and property managers, Lowe’s purchased for $1.32 billion.
The acquisition comes as Lowe’s has been focused on enhancing its pro business, including rolling out an updated version of its Pro loyalty program, with new features and functions.
"Completing the acquisition of FBM is an important step in accelerating our Total Home strategy to serve large pro customers within a $250 billion total addressable market," said Marvin. R. Ellison, Lowe's chairman, president, and CEO. "We would like to extend a warm welcome to the FBM team, and we look forward to building on their proven track record of profitable growth."
According to Ellison, the acquisitions of FBM and ADG will position Lowe's to expand its market penetration and capitalize on the expected recovery in housing, with an estimated 16 million new homes needed in the U.S. by 2033.
As previously announced, FBM will continue to be led by its founder, Ruben Mendoza, and its senior leadership team.
Home Depot boosts pro customer services
Chief Lowe’s rival Home Depot has also been making a concerted effort to obtain the business of home improvement industry professionals. Some examples in the past 12 months or so include:
- Launching a new digital project planning tool designed to streamline how professional renovators, remodelers and specialty tradespeople plan, manage and execute complex projects.
- The acquisition of GMS Inc. through its specialty trade distribution subsidiary, SRS Distribution Inc. GMS is a distributor of specialty building products including drywall, ceilings, steel framing and other complementary products related to remodeling and construction projects in residential and commercial end markets.
- Teaming up with StrataTech Education Group (StrataTech), an operator of skilled trade schools, to expand its Path to Pro program, which aims to educate more people in the skilled trades and help them find careers in the home improvement industry.
- Opening four new distribution centers geared toward serving pro customers in Detroit, southern Los Angeles, San Antonio and Toronto.
Goldman Sachs & Co. LLC and Centerview Partners LLC are acting as financial advisors to Lowe's. Freshfields LLP is acting as legal advisor to Lowe's. RBC Capital Markets is acting as sole financial advisor to FBM. Weil, Gotshal & Manges LLP is acting as legal advisor to FBM.
Based in Mooresville, N.C., Lowe's Companies Inc. operates over 1,700 home improvement stores and employs approximately 300,000 associates.
