As part of its increased focus on professional builders, Lowe’s is spending around $8.8 billion to acquire Foundation Building Materials, a distributor of drywall, insulation, and other goods.
Large residential and commercial experts use FBM’s metal framing, ceiling systems, commercial doors, hardware, and other items for both new construction and repair and remodel projects. It serves 40,000 professional clients at more than 370 locations across the US and Canada.
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The purchase is a component of Lowe’s strategy to give professional builders other choices. The Mooresville, North Carolina-based business recently completed the $1.3 billion purchase of Artisan Design Group, which offers house builders and property managers design, distribution, and installation services for interior surface finishes like flooring, cabinets, and countertops.
Similar actions have been taken by rival Home Depot. The home improvement store said in June that it will pay $4.3 billion to acquire GMS, a distributor of specialty building supplies.
The Tucker, Georgia-based GMS Inc. distributes specialty building materials used in both residential and commercial projects, such as steel frame and drywall.
The purchase of GMS by Home Depot followed its acquisition of SRS Distribution, a professional materials supplier, for almost $18 billion, including debt, last year. SRS offers supplies for experts such as pool contractors, landscapers, and roofers.
According to Neil Saunders, managing director of GlobalData, Home Depot and Lowe’s may both expand in the professional builder industry because of the high level of expenditure in this area.
According to him, pro is essentially the new arena for house remodeling. There will undoubtedly be some brutal fights because there are two large giants in the stadium. At this point, though, we think the market is sufficiently large and dispersed to enable both players to reap some rewards.
The fourth quarter is when Lowe’s acquisition of FBM is anticipated to close.
On Wednesday, Lowe’s released its fiscal second-quarter financial results, which included the acquisition. Analysts surveyed by Zacks Investment Research predicted an adjusted profit of $4.23 per share, while the business reported an adjusted profit of $4.33 per share.
The period’s $23.96 billion in revenue was in line with Wall Street’s projections.
Lowe’s increased their sales forecast for the entire year to between $84.5 billion and $85.5 billion. Sales for the year were previously estimated to be between $83.5 billion and $84.5 billion.
Prior to the market opening, the company’s shares increased by almost 3%.
