United Subcontractors Inc., provider of residential and commercial construction services, has acquired Southern Foam and Coating, an insulation contractor.

The deal will help United Subcontractors solidify its new business in the Southeast U.S., says Bill Varner, company CEO. Southern Foam and Coating is based in Claxton, Georgia, with five operating locations in Georgia, North Carolina and South Carolina, and annual net revenues of more than $9 million. United Subcontractors, headquartered in St. Paul, Minnesota, has more than 42 locations in 15 states, with more than 1,700 employees

Earlier in 2016, Hennessy Capital Acquisition Corp. II (Nasdaq: HCAC, HCACU and HCACW) had announced its intention to acquire the outstanding capital stock of USI, but the deal has hit snags. Hennessy announced in July that it was postponing a previously scheduled shareholder meeting on the deal.

The uptick in new home sales is driving M&A in the construction sector. According to the U.S. Census Bureau, sales of new single family homes rose to 654,000 in July from 582,000 in June. Recent construction-related M&A activity has included Meridian General Capital buying PowderCoat Services Inc., which provides coating services to construction, automotive, consumer and electronics sectors. Also, ABC Supply Co. agreed to acquire L&W Supply—distributor of drywall, ceiling tiles and steel framing materials to building contractors-- from USG Corp. (NYSE: USG); and Hardwoods Distribution Inc. (TSX: HWD) acquired Rugby Architectural Building Products.

Building products