Lowe's to buy Foundation Building Materials for $8.8 billion to boost contractor business

By Savyata Mishra

(Reuters) -Lowe's Cos said on Wednesday it has agreed to buy interior building products distributor Foundation Building Materials for nearly $8.8 billion, stepping up its expansion into the business that serves contractors and builders.

Shares of the home improvement chain rose 3% in premarket trading as the company raised annual sales forecast and beat second-quarter profit estimates.

Lowe's and rival Home Depot are turning to deals to bolster their presence in the $250 billion worth professional builder market, amid weak demand in the do-it-yourself category. Lowe's DIY sales make up about 70% of its annual revenue.

"The urgency of acquisition in the pro distributors market is clearly escalating, which we think will be a focus as competition heats up," J.P.Morgan analyst Christopher Horvers wrote in a note.

Lowe's acquired Artisan Design for $1.33 billion in April, while Home Depot in late June decided to buy specialty building products distributor GMS for about $4.3 billion.

California-based Foundation Building Materials supplies construction products such as drywall, metal framing, ceilings, doors, and hardware to around 40,000 professional customers through more than 370 locations in the U.S. and Canada.

"FBM's scalable, multi-trade distribution platform and strong leadership combined with our recent acquisition of ADG (Artisan Design) will significantly enhance our Pro offering," Lowe's CEO Marvin Ellison said.

A day earlier, Home Depot kept its annual forecasts unchanged, betting on continued spending on smaller-scale maintenance projects and demand from professional contractors in the second half.

Lowe's expects to finance the deal through a mix of short-term and long-term debt. The deal is expected to close in the fourth quarter of 2025, subject to certain regulatory approvals.

The company expects total annual sales in a range of $84.5 billion to $85.5 billion, compared to its prior expectation of $83.5 to $84.5 billion.

It earned $4.33 per share on an adjusted basis in the quarter, exceeding estimates of $4.24, according to data compiled by LSEG.

(Reporting by Savyata Mishra in Bengaluru; Editing by Arun Koyyur)