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Builders FirstSource (BLDR) has agreed to acquire Cornerstone Building Alliance SW, LLC. Builders FirstSource is a supplier of building materials and services.
Following the announcement, shares of the company rose 1.9% in Monday’s extended trading session.
The deal, valued at approximately $400 million, is expected to close by the end of Q2 2021, subject to customary closing conditions and other approvals.
Alliance is the largest supplier of building materials in Arizona. It offers materials and value-add services to contractors across single-family, multi-family and commercial projects.
The acquisition is expected to further enhance Builders FirstSource’s product portfolio and expand its footprint in Arizona. Furthermore, the deal is expected to be accretive to the company’s adjusted earnings per share this year.
Builders FirstSource president and CEO Dave Flitman said, “This acquisition is aligned with our strategy of investing organically and through M&A, to shift our portfolio toward high-value and faster-growth categories.”
He added, “Alliance’s geographic footprint represents an excellent strategic fit, with a limited overlap of our existing geographic coverage that enables us to expand our product lines across various end markets. Building upon the success of the BMC merger, we will be opportunistic in pursuing value-enhancing investments, such as Alliance, that align with our culture, value-added product focus, and high return thresholds.” (See Builders Firstsource stock analysis on TipRanks)
On May 20, BTIG analyst Ryan Gilbert maintained a Buy rating and a price target of $67 (50.6% upside potential).
Gilbert said, “BLDR’s M&A focus is on transactions that will make the company the top distributor in markets where it is currently number 2 or 3, or less. BLDR also continues to prioritize M&A that increase its value-add capabilities.”
Consensus among analysts is a Strong Buy based on 12 unanimous Buys. The average analyst price target stands at $61.75 and implies upside potential of 38.8% to current levels. Shares have gained 116.3% over the past year.
TipRanks data shows that financial blogger opinions are 100% Bullish on BLDR, compared to a sector average of 68%.