Q: What's your take on this DBM acquisition? How much more do you think this deal will push up its share price as a result? Thanks.
5i Research Answer:
Tucker Lumber, at $255M, is a fairly big acquisition for the company. It is being funded by cash and debt. DBM says it is immediately accretive and will add $500M+ in sales at doubled-digit EBITDA margins. DBM's USA sales will increase by 40% and numerous unserved States will be added to its geographic reach. It looks like a good move by the company. DBM does have a lot of debt/obligations already, and at 14X earnings it is not that cheap for a cyclical company. But the acquisition we think has the potential to add 10% to the share value over time.