BlueLinx Holdings (NYSE: BXC) stock price jumped 77% in a single day following the announcement of Cedar acquisition for $413 million – BlueLinx agreed to pay $345M in cash and $68M as the agreed value of the capital leases. BXC stock price has hit $32 in Monday trade, and BXC extended its uptrend today. It hit the new 52-week high of $33 today.

The acquisition will allow BlueLinx to boost its position in the building products wholesale industry, amid better product offerings, including distribution footprint of 70 national locations servicing 40 states and over 50,000 branded and private-label SKUs.

Both companies performed well last year regarding revenue and earnings growth; the combined revenue of BlueLinx and Cedar Creek’s landed around $3.2 billion in 2017, while pro forma LTM Adjusted EBITDA stood at $154 million.

“This transaction will create a leading U.S. wholesale distributor of building and industrial products, and significantly enhance the value that we can deliver to our customers, as well as our supplier partners, and end-market consumers,” said Mitch Lewis, President and Chief Executive Officer of BlueLinx.

The company expects its revenue to grow at a double-digit rate each year over the next few years, supported by broader product portfolio, extensive footprints and improving prospects for constriction and home improvement products.

Besides revenue base expansion, the combined company would have substantial potential to improve their margins and operational efficiencies.

BlueLinx Holdings expects to generate $50 million in cost savings over the next few quarters. The cost-saving opportunities include procurement savings from common suppliers, network/fleet opportunity within common footprints and lower costs from general and administrative expenses. Overall, investors are applauding the acquisition of Cedar, which will improve the revenue and earnings generation potential in the days to come.

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