Lowe’s Companies (NYSE:LOW) closed on its previously announced acquisition of Foundation Building Materials this week.
Foundation Building Materials operates more than 370 locations across the United States and Canada, serving about 40,000 professional customers with products including drywall, insulation, metal framing, ceiling systems, commercial doors, hardware, and complementary building materials. The company generated $6.5 billion in revenue and $635 million in adjusted EBITDA in 2024/
The acquisition of Foundation Building Materials is expected to enhance Lowe’s (NYSE:LOW) offering to Pro customers through an expanded product assortment, faster fulfillment, improved digital tools, and a robust trade credit platform. The home improvement giant said it will provide Lowe’s (LOW) with significant growth opportunities to expand its Pro footprint, given the complementary presence in key geographies like California, the Northeast and the Midwest. It is also seen creating significant cross-selling opportunities between FBM and Lowe’s as well as the recently acquired Artisan Design Group.
“With these acquisitions, Lowe’s will be well-positioned to expand our market penetration and capitalize on the expected recovery in housing, with an estimated 16 million new homes needed in the U.S. by 2033,” highlighted CEO Marvine Ellison. “By expanding our Pro penetration, we also expect to drive more sustainable sales and profit expansion and deliver long-term shareholder value,” he added.
Jefferies Jonathan Matuszewski thinks Lowe’s (LOW) efforts to accelerate its push to better serve the customers in the huge Complex Pro market will pay off as it competes with Home Depot (HD). “With ADG and FBM, Lowe’s has a leading interior solutions platform in the attractive new construction and R&R verticals,” he noted.
Matuszewski said Lowe’s (LOW) will now be able to offer Complex Pro customers in the new construction and repair & remodeling industry faster fulfillment, expanded product assortment, improved digital tools, and a robust trade credit platform. In addition to potential cost synergies, significant cross-selling opportunities are seen as likely through the new business. Looking ahead, the expectation is that Lowe’s (LOW) could fire off some additional bolt-on M&A.
Shares of Lowe’s (LOW) are down 4.9% on a year-to-date basis.