During Monday’s current trade, Builders FirstSource, Inc. (NASDAQ:BLDR)’s shares skyrocketed 57.65% to $10.88, hitting its highest level today, after a leading supplier and manufacturer of structural and related building products for residential new construction in the United States, declared that it has reached a definitive purchase contract to attain ProBuild Holdings LLC, one of the nation’s largest professional building materials suppliers, in an all-cash transaction valued at about $1.63 billion. The transaction, which was approved by the Builders FirstSource Board of Directors, is subject to customary closing conditions and regulatory approvals and is predictable to close in the second half of 2015.
ProBuild was created in 2006 by Devonshire Investors, the private equity firm associated with FMR LLC, the parent company of Fidelity Investments. With about $4.5 billion in proceed in 2014, ProBuild is one of the largest distributors of building materials to professional builders, contractors and project-oriented consumers in the United States. ProBuild operates lumberyards, component facilities, millwork shops, gypsum yards and retail stores across 40 states. Together, Builders FirstSource and ProBuild will have an improved portfolio of products with raised breadth and depth within its categories, counting lumber, windows, doors, millwork, hardware, roof and floor trusses, engineered wood products, gypsum, roofing, metal and concrete products, cabinets and countertops. In addition, the combined company will better serve its customer base through its broader scale and operating footprint, enabling it to deliver products and services more effectively and efficiently.
Planned and Financial Benefits of Transaction:
- Greater Diversification and Scale: The combination creates a diversified national pro dealer with 2014 combined proceeds of about $6.1 billion. The transaction represents an important opportunity to grow in four critical customer segments, counting Production Builders, Custom Builders, Multi-Family/Commercial and Repair & Remodel. The improved diversification of products and services will enable the combined company to capitalize on the continued recovery in the housing market, while also better protecting the Company from cyclicality through broader sales exposure.
- Improved Geographic Footprint: Upon completion of the transaction, the combined company will be better positioned to meet the needs of all customers in the highly fragmented professional building materials segment. The combined company will have a presence in 40 states and 24 of the top 25 metropolitan statistical areas (based on 2014 Single Family Home Building Permits per U.S. Census data).
- Expanded Sales of Higher Margin Products: Builders FirstSource brings to ProBuild noteworthy sales expertise in value-added products, which combined with ProBuild’s attractive customer mix, should result in improved sales growth of higher margin products.
- Substantial Cost-Savings: The combination of Builders FirstSource and ProBuild is predictable to generate a range of about $100 million to $120 million in annual run-rate cost-savings synergies in the first two years following close. Actions to start capturing a majority of these savings are predictable to be implemented within the first 12 months following close through network optimization, procurement, and general and administrative costs. One-time costs of $90 million to $100 million are predictable to be incurred to achieve these synergies during the first two years.
- Favorable Timing, Growth Potential and Financial Influence: The U.S. single-family housing market is at near record levels of affordability and demonstrating a solid recovery. At recently’s level of about 1.0 million total housing starts per year, total housing starts still need to raise about 50% to reach the historic median and double to reach preceding peak levels. The combined company anticipates to capitalize on its expanded financial profile through the recovery. Both companies have steadily improved adjusted EBITDA and margins through recognizing efficiencies over the past four years. Additionally, the transaction is predictable to enhance adjusted EBITDA and margins through the realization of substantial cost synergies and a more diversified portfolio. The transaction is also predictable to be right away accretive to Builders FirstSource’s earnings.
- Strong Cash Flow Generation Supports Predictable Delevering: On a December 31, 2014 pro forma basis, the combined company had pro forma net debt of $2.1 billion, counting lease finance obligations, which implies a multiple of 5.6x net debt / adjusted EBITDA, after giving effect to $110 million of annual run-rate cost-savings synergies, the midpoint of the predictable range. The combined company is predictable to generate noteworthy cash flow that will allow it to delever following the close of the transaction. This delevering will be driven primarily through cost savings realization, earnings expansion, and strong free cash flow generation from operations, further improved by the recovering housing sector and the utilization of tax assets.
Leadership:
Upon closing of the transaction, Floyd Sherman will serve as Chief Executive Officer of the combined company, and Chad Crow will serve as Chief Financial Officer. Robert Marchbank, Chief Executive Officer of ProBuild, will continue as part of the ProBuild leadership team to support integration planning and ensure a smooth transition. Over the coming months, additional declarations will be made regarding the combined company’s senior leadership team, which will be composed of leaders from both companies.
The transaction is predictable to close in the second half of 2015 and is subject to, among other things, the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in addition to other customary closing conditions.
Builders FirstSource will host a conference call to talk about the transaction recently, April 13, 2015, at 8:00 a.m. Central Time (7:00 a.m. Mountain Time and 9:00 a.m. Eastern Time) and provide accompanying slides, which can be accessed on the company’s website at www.bldr.com under the “Investors” section.
Headquartered in Dallas, Texas, Builders FirstSource is a leading supplier and manufacturer of structural and related building products for residential new construction. The company operates 56 distribution centers and 56 manufacturing facilities in nine states, principally in the southern and eastern United States.
During an early morning trade, Great Basin Scientific, Inc. (NASDAQ:GBSN)’s shares climbed 45.58% to $4.28, after a molecular diagnostics company, declared continued growth in the number of customers using its sample-to-result molecular diagnostic technology during the first quarter of 2015. The Company stated a total of 101 proceed-generating customers in the United States as of March 31, 2015, a 20% raise over the 84 customers stated as of the preceding quarter ending December 31, 2014. Customer evaluations, which represent the Company’s sales pipeline, have seen a matched raise of 20% over the fourth quarter of 2014 from 43 active and planned evaluations to 52 at the end of the first quarter of 2015.
Great Basin Scientific, Inc., a molecular diagnostic testing company, doing business as Great Basin Corporation, develops and commercializes molecular diagnostic systems that are designed to test hospital-attained infections.
Oramed Pharmaceuticals Inc. (NASDAQ:ORMP), during its Monday’s current trading session gained 17.74%, to $7.34, after a clinical-stage pharmaceutical company, declared the first patient has been enrolled in its Glucose Clamp Study. The study will be performed at The University of Texas Health Science Center at San Antonio and University Health System’s Texas Diabetes Institute under the supervision of Professor Ralph DeFronzo.
The glucose clamp is a method for quantifying insulin absorption in order to measure a patient’s insulin sensitivity and how well a patient metabolizes glucose. The glucose clamp technique represents the gold standard for pharmacodynamic studies in diabetes drug development.
In addition to the clamp study, Oramed plans to initiate its Phase IIb oral insulin trial in the U.S. with a protocol which comprises over 30 U.S. sites covering about 180 patients and has both efficacy and safety as its primary end-points.
“We are happy to have initiated this study and enrolled the first patient. We are additionally excited at the prospects of starting our larger Phase IIb trial in the near term. The data from the two trials will allow for a clearer picture of our oral insulin and its pharmacological characteristics as we move forward with our development plan,” stated Oramed CEO Nadav Kidron.
Oramed Pharmaceuticals Inc. engages in the research and development of pharmaceutical solutions for the use of orally ingestible capsules or pills for delivery of polypeptides. Its product portfolio comprises ORMD-0801, an oral insulin capsule that accomplished Phase IIa clinical trials for the treatment of diabetes; and ORMD-0901, an analog for GLP-1 gastrointestinal hormone, which is in pre-clinical trials for the treatment of type 2 diabetes.
Finally, Sino-Global Shipping America, Ltd. (NASDAQ:SINO), gained 12.77% Monday, after a shipping agency, logistics and ship administration services company declared that it has reached an Asset Purchase Contract dated April 10, 2015 by and between Sino-Global and Rong Yao International Shipping Limited, a Hong Kong company, following which the Company agreed to attain, subject to a number of closing conditions, Rong Zhou, an 8,818 gross tonnage oil/chemical transportation tanker from the Vessel Seller; and in connection therewith, the Company issued to the Vessel Seller 1.2 million shares of its restricted ordinary stock representing $2,220,000 of the $10.5 million purchase price for the Vessel. Sino-Global and the Vessel Seller agreed that each of the 1.2 million shares issued to the Vessel Seller was valued at $1.85. In connection therewith, the Company agreed to file a registration statement covering the offer and resale of the 1.2 million shares issued to the Vessel Seller. Although the Company believes the attainment of the Vessel will close on or about June 30, 2015, no assurances can be given when such closing will occur.
Mr. Lei Cao, Chief Executive Office of Sino-Global said, “This attainment marks the next step of our turnaround story as we expand our business from being a service provider to an asset owner with an integrated, scalable service platform. We are extremely excited about the Vessel attainment as we believe it will strengthen our operating cash-flows, broaden our proceed streams and enhance our ability to deliver sustainable earning growth.”
Sino-Global Shipping America, Ltd. provides customized shipping agency services primarily in the People’s Republic of China. The company also offers shipping and chartering services, and inland transportation administration services, in addition to ship and crew administration services for dry bulk ships.
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