Lowe’s Companies Inc. is buying a Santa Ana-based distributor of ceiling systems, commercial doors, drywall and metal framing for $8.8 billion.
The deal to acquire Foundation Building Materials Inc., also known as FBM, would help Lowe’s create more opportunities for its “Pro” customers who are on the market for large residential and commercial products.
“With the acquisition of FBM, we are strategically expanding our Pro offering to serve the large Pro, especially their planned spend,” Lowe’s Chairman and Chief Executive Marvin Ellison said during the company’s Aug. 20 earnings call.
“We’re now well positioned to not only continue driving growth with our core DIY and small to medium Pro customers, but this acquisition also unlocks our ability to serve the larger Pro within a $250 billion total addressable market.”
The sale caps a remarkable run for FBM founder and CEO Ruben Mendoza, who started the company in 2011. After taking it public, the company was sold for $1.4 billion, including debt, in 2021 to private equity firm American Securities LLC.
Lowe’s (NYSE: LOW) is a Fortune 100 home improvement company based in Mooresville, North Carolina, with about 16 million weekly customer transactions and $83 billion in sales for fiscal year 2024. The company has 1,700 stores and more than 300,000 associates nationwide.
The value that Lowe’s placed on FBM was demonstrated by the retail giant paying 13.4 times the adjusted EBITDA multiple. Lowe’s said Mendoza and the company’s other senior leadership “will continue to lead FBM.”
“Together with Lowe’s complementary products and incredible brand, we’ll offer a more comprehensive solution for Pro customers and accelerate growth,” Mendoza said in a statement.
An Entrepreneur’s Journey
Mendoza has more than 30 years of industry experience, including in 1991 when he joined AMS, a distributor of wallboard, acoustical suspended ceiling systems, lath and plaster products, doors and other building products. In 2003, he became CEO of AMS, which was sold in 2011 to USG Corp.
After Mendoza founded FBM, he expanded it to more than 370 locations in the U.S. and Canada. The interior building materials company generated $6.5 billion in revenue in 2024, with $635 million in adjusted EBITDA.
The company employed a roll-up strategy that made more than 60 acquisitions.
“The result is a purpose-built highly scalable, multitrade distribution platform,” Ellison told analysts. “Today, FBM is a leader in drywall, ceiling systems and metal framing with an established presence loyal customer base, and a highly effective sales force that optimizes advanced selling tools to drive engagement and conversion.”
Ellison said a compelling aspect of FBM is a “strategic presence” in California, the Northeast and the Midwest where Lowe’s has less of a presence.
American Securities, in a statement about the Lowe’s deal, said FBM experienced annual revenue growth of 27% under its ownership.
“We’re proud to have supported FBM in achieving remarkable growth, transforming the business through strategic M&A, the opening of new markets, and innovative e-commerce initiatives,” American Securities Partner Kevin Penn said in a statement.
The New York-based private equity firm said the deal to buy FBM would close in this year’s fourth quarter.
Lowe’s confirmed it secured $9 billion in bridge financing from Bank of America N.A. and Goldman Sachs & Co. LLC to complete the deal.
Advising Lowe’s on the deal were Goldman Sachs and Centerview Partners LLC as financial advisors and Freshfields LLP and legal counsel.
RBC Capital Markets served as financial advisor for FBM. Weil, Gotshal & Manges LLP was FBM’s legal counsel.
