Lowe's Goes Big! $8.8B Deal to Dominate Contractor Market!
Lowe's Makes a Bold Move in the Pro Market
Lowe's Cos. is set to acquire Foundation Building Materials (FBM) for a staggering $8.8 billion, signaling a major push to capture a larger share of the contractor and builder market. The announcement sent Lowe's shares soaring 3% in premarket trading, fueled by an increased annual sales forecast and impressive second-quarter profit figures.
This acquisition highlights the growing competition between Lowe's and Home Depot in the lucrative professional builder market, estimated to be worth $250 billion. While the do-it-yourself (DIY) segment has seen some softening, the pro market remains a key area of growth. Lowe's, with approximately 70% of its revenue coming from DIY sales, is clearly looking to diversify and strengthen its position with professional contractors.
J.P. Morgan analyst Christopher Horvers noted the increasing urgency for acquisitions in the pro distributors market, suggesting that the competition is only going to intensify. Lowe's recent purchase of Artisan Design for $1.33 billion in April, coupled with Home Depot's acquisition of GMS for $4.3 billion in late June, further underscores this trend.
Foundation Building Materials, based in California, boasts a network of over 370 locations across the U.S. and Canada, serving approximately 40,000 professional customers. They provide a wide range of construction products, including drywall, metal framing, ceilings, doors, and hardware.
According to Lowe's CEO Marvin Ellison, the acquisition of FBM, combined with the recent addition of Artisan Design Group (ADG), will significantly enhance Lowe's Pro offerings. The company plans to finance the deal through a combination of short-term and long-term debt, with the transaction expected to be finalized in the fourth quarter of 2025, pending regulatory approvals.
This strategic move by Lowe's comes a day after Home Depot maintained its annual forecasts, relying on continued spending on smaller maintenance projects and sustained demand from professional contractors throughout the latter half of the year.