Builders FirstSource, Inc. (NasdaqGS:BLDR) entered into a definitive merger agreement to acquire BMC Stock Holdings, Inc. (NasdaqGS:BMCH) for $2.5 billion on August 26, 2020. Under the terms of the agreement, BMC shareholders will receive a fixed exchange ratio of 1.3125 shares of Builders FirstSource common stock for each share of BMC common stock. Upon completion of the merger, existing Builders FirstSource shareholders will own approximately 57% and existing BMC shareholders will own approximately 43% of the combined company on a fully diluted basis. Following the transaction closing, the combined company will operate under the name Builders FirstSource, Inc. and BMC continuing as the surviving corporation and a wholly owned subsidiary of Builders FirstSource, Inc. The agreement contains restrictions on BMC's and Builders FirstSource's ability to solicit competing acquisition proposals. Upon termination of the agreement, under certain specified circumstances, BMC may be required to pay a termination fee of $66 million to Builders FirstSource or Builders FirstSource may be required to pay a termination fee of $100 million to BMC.

After a 90-day transition period following the completion of the merger, Chad Crow, current Chief Executive Officer of Builders FirstSource, will retire as previously announced and will be succeeded as Chief Executive Officer of the combined company by Dave Flitman, current Chief Executive Officer of BMC. Thereafter, Chad Crow will continue to be available on a consulting basis to the combined company. The management team will be comprised of leaders from both organizations. Peter Jackson, Chief Financial Officer of Builders FirstSource, will serve as Chief Financial Officer of the combined company. The transition and integration of the combined company will be led by Dave Rush, Chief Operating Officer of Builders FirstSource's East Region, and Jim Major, Chief Financial Officer of BMC. Upon closing, the combined company's Board of Directors will have 12 directors, consisting of seven members from the Builders FirstSource Board of Directors and five members from the BMC Board of Directors. Paul S. Levy, Co-Founder and current Chairman of the Board of Builders FirstSource, Daniel Agroskin, Cleveland A. Christophe, W. Bradley Hayes, Brett N. Milgrim, Floyd F. Sherman, and Craig A. Steinke. The BMC Designees are David E. Flitman, Mark Alexander, Cory J. Boydston, David W. Bullock, and James O'Leary. Following the transaction closing, the combined company will be headquartered in Dallas, while maintaining key functional corporate centers of excellence in both Raleigh and Denver. Donald F. McAleenan resigned as Senior Vice President, General Counsel, and Secretary of Builders FirstSource. McAleenan remains an employee of Builders FirstSource. As a result of the completion of the merger, the common stock of BMC has been delisted for trading on the NASDAQ

The transaction is subject to, among other things, the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, as well as other customary closing conditions, approval for listing on the NASDAQ Stock Market of the shares of the BLDR Common Stock to be issued as consideration, effectiveness of the registration statement on Form S-4 to be filed with the United States Securities and Exchange Commission, absence of a material adverse effect on BMC or Builders FirstSource and the approval of shareholders of both Builders FirstSource and BMC and the receipt of other required regulatory approvals. The transaction has been unanimously approved by the Boards of Directors of both Builders FirstSource and BMC, which also recommended to their respective stockholders to adopt the merger. As of October 15, 2020, in consultation with BMC, Builders FirstSource voluntarily withdrew its HSR Notification on October 13, 2020, and re-filed its HSR Notification on October 15, 2020. The waiting period under the HSR Act with respect to the refiled notification currently is scheduled to expire on November 16, 2020, unless extended. On November 13, 2020, FTC granted the early termination notice. As of December 22, 2020, the shareholders of BMC Stock Holdings approved the transaction at its special meeting of stockholders. The transaction is expected to close in late 2020 or early 2021. As of December 22, 2020, the transaction is expected to close on January 1, 2020. The transaction is expected to be accretive to adjusted earnings per share in the first year after closing.

Rothschild & Co and Morgan Stanley & Co. LLC acted as financial advisors and, Allison Land, Regina Olshan, Linda Barrett, Kenneth Schwartz, Trevor Allen and Elizabeth Malone of Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisors to Builders FirstSource. Moelis & Company acted as financial advisor to BMC. Eric Swedenburg, Sebastian Tiller, Jeannine McSweeney, Sara Razi, Andrew B. Purcell, Richard A. Fenyes, Daniel R. Kay and Genevieve Dorment of Simpson Thacher & Bartlett LLP acted as legal advisors to BMC. Stuart Rogers and Kevin Miller of Alston & Bird LLP acted as legal advisors to Rothschild & Co in the transaction. Adam Reeder, Paul Klepetko, Justin Kish and Lee LeBrun of Rothschild & Co US Inc. served as fairness opinion provider to Builders FirstSource, Inc.

Builders FirstSource, Inc. (NasdaqGS:BLDR) completed the acquisition of BMC Stock Holdings, Inc. (NasdaqGS:BMCH) on January 1, 2021.