BlueLinx Holdings Inc. BXC, a distributor of building products in North America, saw its stock soar higher by more than 80 percent in reaction to an acquisition announcement.
What Happened
BlueLinx Holdings reached an agreement to acquire Cedar Creek, a building wholesaler distributor, for $413 million. The combination of the two companies will create one of the largest building products wholesale distributor with over 50,000 branded and private-label SKUs with distribution across 70 national locations and servicing 40 states.
The merger is expected to generate an annual run-rate cost saving of at least $50 million within 18 months of the close of the merger, a joint press release said. In addition, the deal will be immediately accretive to BlueLinx's earnings per share and offer greater financial flexibility to support its ongoing deleveraging initiatives.
Why It's Important
"The combination will significantly enhance our product portfolio by providing greater breadth and depth of building products and services for our customers and suppliers across our markets," said Mitch Lewis, President and CEO of BlueLinx. "This transaction will create a leading U.S. wholesale distributor of building and industrial products, and significantly enhance the value that we can deliver to our customers, as well as our supplier partners, and end-market consumers."
What's Next
The merger has been approved unanimously by BlueLinx's board of directors and is expected to finalized and completed within 45 days.
At time of publication, BlueLinx was trading around $28.84, up 82.6 percent on the day. The company has a market cap of about $262 million.
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