Markets

Why BMC Stock Holdings and Builders FirstSource Jumped This Morning

What happened

Shares of residential building products suppliers BMC Stock Holdings (NASDAQ: BMCH) and Builders FirstSource (NASDAQ: BLDR) were up as much as 24% and 10%, respectively, early this morning. As of 11 a.m. EDT, BMC remained up 20%, and Builders FirstSource eased back to a 6% gain. The moves follow an announcement today that the two companies have entered into an all-stock merger agreement.

So what

Builders FirstSource is the country's largest supplier of structural building products, while BMC is a more regional supplier in the South and West. The combined companies have over $11 billion in sales. 

wood supplies on new home construction site

Image source: Getty Images.

The all-stock merger will give BMC shareholders 1.3125 shares of Builders FirstSource for each existing share of BMC, resulting in 43% ownership in the combined company. Builders FirstSource shareholders will own 57%.

Now what

Upon completion of the merger, current Builders FirstSource CEO Chad Crow will retire, and current BMC CEO Dave Flitman will become CEO of the merged companies. 

The merger has been unanimously approved by the boards of both companies. The combination, which will have a presence in 42 states, will be the leading supplier of building materials and services to the residential construction industry.  

The companies believe the merger will drive organic growth, as value-added offerings complement each other. BMC's Ready-Frame, a computerized whole-house design solution, combined while Builders FirstSource trusses and manufactured components, will meet the needs of more customers in a more geographically diverse market, the companies said. 

The combined company will operate under the name Builders FirstSource Inc., and be headquartered in Dallas, Texas. 

10 stocks we like better than Builders FirstSource
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Builders FirstSource wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of August 1, 2020

 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

BLDR

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More