BlueLinx Holdings, Inc (NYSE: BXC)

Shares of North American building products distributor BlueLinx Holdings climbed by more than 80% after the company announced that it would acquire Cedar Creek.

The company reached a $413 million acquisition agreement with building wholesaler distributor Cedar Creek. The acquisition will result in the formation of one of the biggest building products distributor in North America with more than 50,000 private-label and branded SKUs servicing 41 states.

A joint press release revealed that the merger is estimated to generate an annual $50 million run-rate cost saving within the first 18 months. Additionally, the deal will offer immediate greater financial flexibility to BlueLinx’s ongoing initiatives and shall be accretive to the company’s earnings per share.

BXC Earnings & Outlook

BlueLinx rose in Monday’s early session by 4.70 to trade at $20.50 on above-average volume. The company set a new high for the year on Monday and broke out of a month’s long trading range. Its Cedar Creek acquisition price will consist of $68M as capital leases’ agreed value and $345M in cash. Both companies expect to complete the transaction within the next 45 days under customary regulatory approvals and closing conditions,

BlueLinx’s CEO Comments

BlueLinx Chief Executive Officer Mitch Lewis said that his company was happy to announce its acquisition of Cedar Creek. The CEO added that the commitment of Cedar Creek to its customers and organic growth as well as its superb acquisitions record makes it an ideal partner for his company.

“The combination will greatly improve the portfolio of our products by providing greater depth and breadth of building services and products for our suppliers and customers across our markets. The deal will also create a leading American wholesale distributor of industrial and building products, and greatly improve the level of service that we deliver to our end-market consumers and supplier partners,” Lewis said. “With an extensive products cache, the benefits of our combined footprint and strong technology will be positioned well to drive rewarding growth for our shareholders,” he added.