Blog Coverage: Lowe’s Announced the Acquisition of Maintenance Supply Headquarters

Upcoming AWS Coverage on Lumber Liquidators Holdings Post-Earnings Results

LONDON, UK / ACCESSWIRE / May 19, 2017 / Active Wall St. blog coverage looks at the headline from Mooresville, North Carolina based Lowe’s Cos. Inc. (NYSE: LOW) as the Company announced on May 18, 2017, that it had acquired Houston, Texas based Maintenance Supply Headquarters (MSH) for $512 million. The acquisition will allow Lowe’s to expand its client base by targeting construction contractors and professional customers. Register with us now for your free membership and blog access at:

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One of Lowe’s Cos.’ competitors within the Home Improvement Stores space, Lumber Liquidators Holdings, Inc. (NYSE: LL), reported on May 02, 2017 financial results for the Q1 ended March 31, 2017. AWS will be initiating a research report on Lumber Liquidators in the coming days.

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Lowe’s was founded in 1946 and is a home improvement Company and serves over 17 million customers a week across the United States, Canada, and Mexico. Lowe’s and its related businesses operate or service 2,365 home improvement and hardware stores and employ over 290,000 people. The Company’s sales for the fiscal year 2016 were $65 billion.

The deal

The finer details of the acquisition have not been shared by any of the Companies. The transaction is expected to close in Q2 FY17 which ends in July 2017 subject to regulatory approvals and closing conditions. The transaction is expected to be accretive to Lowe’s earnings in fiscal 2017 ending in February 2018.

Once the transaction is completed, Mike Tummillo, Lowe’s Senior Vice President of Pro Sales, will be in-charge of Maintenance Supply Headquarters and Central Wholesalers. He will also be heading Lowe’s Pro Services business and Alacrity Services, a leading supplier of home restoration and repair services. He has been tasked with the strengthening and expanding Lowe’s relationship with professional customers.

Commenting on the acquisition, Richard D. Maltsbarger, Chief Development Officer and President of International said:

“Together, Maintenance Supply Headquarters and Central Wholesalers will expand our capabilities in serving this key segment while strengthening our platform for future growth with enhanced product and service offerings for MRO customers.”

Richard “Rusty” Penick, Co-founding, Partner, and CEO of Maintenance Supply Headquarters, added:

“We are thrilled to become part of the Lowe’s family and have high regard for the team and the Company’s leadership in the home improvement industry. Our partnership with Lowe’s marks an exciting next step in the evolution and growth of Maintenance Supply Headquarters.”

About MSH

MSH was founded in 2006 and is a wholesale maintenance supplier of maintenance, repair and operations (MRO) products to the multifamily housing industry. MSH has 13 distribution centers across the US which caters to clients in the western, south eastern and south central US. It offers a massive portfolio of more than 5,300 products generally used for maintaining and renovating multifamily properties, renovation projects, custom fabrication, and educational classes. These includes a wide range of appliances and products for plumbing, HVAC, lighting, hardware, electrical etc. The Company has over 570 employees across its locations.

How Lowe’s benefits from the acquisition?

Lowe’s acquisition of MSH should be seen in conjunction with Lowe’s acquisition of Central Wholesalers, which the Company acquired in November 2016. Central Wholesalers is a prominent MRO distributor with presence in the Mid-Atlantic and Northeast regions of US. The two acquisitions give Lowe’s an opportunity to cater to the construction contractors and professional customers and serve the multifamily housing industry.

The two acquisitions will also allow Lowe’s to expand their scope of operations and geographic footprint. On completion of the transaction, Lowe’s combined multifamily MRO business will have 16 distribution centers with the ability to generate more than $400 million in annual sales.

Lowe’s performance in the last few quarters has not been able to match up to its rivals such as Home Depot. Home Depot has an advantage over Lowe’s as a large chunk of its business comes from sales to contractors and other professionals compared to Lowe’s DIY customers. With these two acquisitions, Lowe’s will be in a better position to take on the competition from its rivals. At present, the pro-business is growing faster than the general home improvement market.

Stock Performance

At the close of trading session on Thursday, May 18, 2017, Lowe’s share price finished the trading session at $84.05, marginally up 0.36%. A total volume of 4.55 million shares exchanged hands. The stock has surged 22.84% and 8.91% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have soared 19.26%. The stock is trading at a PE ratio of 24.18 and has a dividend yield of 1.67%.

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