Builders FirstSource (BLDR), a leader in the building products industry, announced that it has entered into a definitive agreement to acquire WTS Paradigm for a cash consideration of $450 million. The deal is likely to close this year. WTS Paradigm is a software solutions and services provider for the building products industry.
Following the news release, shares of the company declined 5.9% in Tuesday’s trading session. However, they recovered marginally to close at $42.80 in the extended trading session.
Wisconsin-based Paradigm is likely to generate revenues of about $50 million in 2021. With the acquisition of Paradigm, Builders FirstSource will be able to gain access to Paradigm’s expertise in technology, software development, and consulting services, which is expected to make the home building process easier. Furthermore, it will aid the company’s long-term vision of incorporating digital solutions to serve its customers more efficiently.
CEO of Builders FirstSource Dave Flitman said, “Purchasing Paradigm is an important step in advancing our digital strategy to create significant construction process efficiencies through prudent investments in innovative technologies. Home construction lags far behind other major industries in the adoption of modern tools that can save time and money and reduce waste. Our unmatched scale, industry relationships and technical knowledge uniquely position us to increase the adoption of digital solutions across a fragmented customer base. Paradigm’s powerful technology platform provides us with an enhanced customer value proposition, helping fuel long-term growth by establishing a leadership position in digital solutions for homebuilders.” (See Builders FirstSource stock chart on TipRanks)
Recently, Robert W. Baird analyst David Manthey reiterated a Buy rating on the stock with a price target of $62 (45.6% upside potential).
According to Manthey, the company’s existing portfolio of manufactured products is of significant value in the prevailing housing environment. Furthermore, lumber price moderation acts as a tailwind for the company.
Consensus among analysts is a Strong Buy based on 10 unanimous Buys. The average Builders FirstSource price target of $64.50 implies upside potential of 51.5% from current levels. Shares of the company have gained 105.6% over the past year.
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