April 13, 2015 / 12:52 PM / 2 years ago

UPDATE 1-Builders FirstSource to buy ProBuild Holdings for $1.63 bln

(Adds details, background)

April 13 (Reuters) - Builders FirstSource Inc, a U.S. supplier of residential building products, said it would buy privately held ProBuild Holdings LLC for $1.63 billion in cash.

Builders FirstSource shares rose 57 percent to $10.83 in premarket trading on Monday.

The transaction is expected to immediately add to Builders FirstSource's earnings, the company said.

ProBuild was created in 2006 by Devonshire Investors, the private equity arm of Fidelity Investments, the second-largest U.S. mutual fund firm. The company reported about $4.5 billion in revenue in 2014.

Dallas-based Builders FirstSource makes and distributes building products to homebuilding companies, while Minnesota-based ProBuild operates about 400 lumber and building product centers across the United States.

The deal, which is expected to close in the second half of 2015, will create a diversified national dealer with a combined revenue of $6.1 billion, Builders FirstSource said.

The transaction is expected to generate about $100 million- $120 million in cost savings in each of the first two years after closing, the company said.

Reuters exclusively reported in March that the companies were talks over a possible deal.

Builders FirstSource Chief Executive Floyd Sherman will head the combined company.

Citi and Deutsche Bank are financial advisers to Builders FirstSource while Skadden, Arps, Slate, Meagher & Flom LLP and Kirkland & Ellis LLP are its legal advisers.

Credit Suisse is financial adviser to ProBuild and Goodwin Procter LLC is its legal adviser.

Up to Friday's close, Builders FirstSource shares had fallen nearly 19 percent over the past year. (Reporting by Rohit T. K. in Bengaluru; Editing by Ted Kerr and Simon Jennings)

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