Lowe's Acquires FBM for $88 Billion, Boosting Professional Market Reach

Lowe's, a prominent U.S. home improvement and building materials retailer, has announced its largest acquisition to date with the purchase of Foundation Building Materials (FBM) for 88 billion dollars. The transaction will be financed through a combination of short-term and long-term debt, including a 90 billion dollar bridge loan commitment.

FBM operates over 370 locations across the United States and Canada, catering to approximately 40,000 professional customers. The company offers a wide range of products, including drywall, insulation materials, metal framing, suspended ceiling systems, commercial doors, hardware, and related building materials. In 2024, FBM achieved 65 billion dollars in revenue, with an adjusted EBITDA of 6.35 billion dollars.

The acquisition is expected to close in the fourth quarter and is anticipated to contribute to Lowe's profit growth in the first fiscal year post-closing. Upon completion of the deal, Lowe's expects its leverage ratio to rise to 3.4-3.5 times. The company plans to temporarily suspend stock buybacks and aims to reduce the leverage ratio to 2.75 times by the end of the second quarter of 2027.

Analysts have responded positively to the news, highlighting the increasing urgency of mergers and acquisitions in the professional distribution market. This trend is driven by competition among companies seeking to expand their market reach and build differentiated business capabilities. The acquisition of FBM, along with previous acquisitions, positions Lowe's as a leader in the attractive new construction and remodeling sectors. This move is expected to provide faster fulfillment, a broader product range, enhanced digital tools, and a robust trade credit platform for professional customers in both new construction and remodeling industries. The acquisition is also expected to bring significant cross-selling opportunities and potential cost synergies.

Professional customers bring higher sales volumes and average order values, along with repeat business, making them an ideal target for Lowe's expansion. The acquisition is seen as a strategic move to enhance Lowe's capabilities in the professional market, providing faster fulfillment, stronger digital tools, and a robust trade credit program. In the long term, it is expected to help Lowe's penetrate deeper into the larger professional segments of the home improvement market.