U.S. LBM announced Wednesday morning that Kelso & Company has entered into a definitive agreement to purchase a majority of the equity interests in US LBM Holdings, LLC. BlackEagle Partners and members of U.S. LBM management will be investors along side of Kelso. Terms of the transaction were not disclosed.
“Our partnership with BlackEagle has led to the creation of a leader in building products distribution,” said L.T. Gibson, CEO of US LBM in a prepared statement. “We are excited about Kelso’s investment in the business and the new partnership between Kelso, BlackEagle and management. We look forward to working with our shareholders to continue to build and grow the company.”
Kelso’s interest in US LBM was announced earlier this month.
Christy Sadler, managing partner at capital advisory firm Anchor Peabody that specializes in LBM industry mergers and acquisitions, said that while this sale was a secret to no one, the official announcement today bodes well for the industry as a whole.
“It’s continuing the trend in consolidation in the LBM space,” Sadler said. “There are some mega-mergers going on this summer and into the fall. That is going to change the landscape for some of the top players.”
Those mergers in the top players will play a role in paving a way for mid-size dealers as well, Sadler said.
“It’s setting the bar for valuation for what well-run larger yards are worth. It’s not the end of consolidation, it’s merely the beginning. It’s proving out the fact that there are benefits to consolidation. The quickest and easiest way is to do the large ones first and continue to backfill with the medium size ones. If I was a dealer in the top 20 or 30, I’d be very excited by this.”
US LBM is a collection of leading building material distributors serving the Midwest, Northeast, Southeast, Mid-Atlantic and Western U.S. in 22 states with approximately 160 locations.