Lowe’s expands offerings for multifamily properties through acquisition
Lowe’s Cos. Inc. (NYSE: LOW) has reached a deal to buy Maintenance Supply Headquarters, a producer of repair and home improvement tools for the multifamily housing sector, for approximately $512 million. Lowe’s will gain 13 distribution centers with the acquisition of the target.
Maintenance Supply Headquarters, founded in 2006, is a Houston-based wholesale supplier. The target’s portfolio of more than 5,300 maintenance, repair and operations (MRO) products include: bath hardware, ceiling fans, ceramic tiles, copper tubes and fittings, faucets, flooring, and window coverings. The company’s distribution centers serve customers in 29 geographic areas covering the western, southeastern and south central U.S. regions.
Lowe’s is one of the largest home improvement retail distributors in the U.S. and serves more than 17 million customers a week in the U.S., Canada and Mexico. The deal for Maintenance Supply Headquarters augments Lowe’s strategy to target professional customers. Lowe’s pro services division, through the LowesForPros.com website, helps customers buy hardware, develop requisition lists, and track purchases of more than 500,000 items to run their independent businesses. When combined with Lowe's November 2016 acquisition of Central Wholesalers, a prominent MRO distributor in the Mid-Atlantic and Northeast, this deal is expected to “substantially expand” Lowe's ability to serve the multifamily housing industry, says the company.
In 2016, Lowe’s reported approximately $65 billion in sales. Lowe’s and its related businesses operate and service a total of 2,365 home improvement and hardware stores. The Mooresville, North Carolina-based hardware retail giant was founded in 1946 and employs more than 290,000 workers. Lowe’s will operate 16 distribution centers in total at the close of the deal.
Despite some weakness in the fourth quarter of 2016, dealmakers expect more construction-related deals to occur in 2017 as there is still plenty of room for growth. The fluctuating housing market has influenced a number of deals for manufacturers of building products, including: High Road Capital Partners’s deal for Midwest Wholesale Hardware Co.; PE firm Industrial Opportunity Partners acquiring roofing manufacturer Union Corrugating Company Holdings Inc.; CenterOak Partners LLC’s purchase of windows manufacturer Cascade Windows Inc. from Altamont Capital Partners; Monomoy Capital Partners‘ completed acquisitions of building product companies Construction Resources Inc. and Builder Specialties Inc.; and Masonite Intl. Corp.’s (NYSE: DOOR) acquisition of doorkit maker National Hickman.
Goldman Sachs & Co. LLC (NYSE: GS) is acting as financial adviser to Lowe's, while Hunton & Williams LLP is serving as legal counsel. Crutchfield Capital Corp. is acting as financial adviser to Maintenance Supply Headquarters and Porter Hedges LLP is serving as legal advisor. The deal is expected to close before August 2017.