Freedonia Analyst Weighs in on Beacon Roofing Supply's Acquisition of Allied Building Products

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Aug 25, 2017, 10:16 ET

CLEVELAND, Aug. 25, 2017 /PRNewswire/ -- Beacon Roofing Supply announced today that it plans to acquire Allied Building Products, a leading distributor of roofing and other building products, from Ireland-based CRH. The acquisition, which is expected to close early in 2018, will create a company that has nearly 600 distribution facilities across the US and Canada.

According to Freedonia Group analyst Matt Zielenski, the acquisition reflects the ongoing evolution of consolidation in the roofing distribution industry. "In our recent study on US roofing distribution we found that over the past decade medium- and large-sized roofing distributors have frequently purchased smaller firms in order to gain market share. However, as the industry has consolidated it has become increasingly difficult to boost sales in this manner. By acquiring one of its largest competitors, Beacon Roofing Supply is significantly expanding its presence in the market with a single purchase, and will cement its position as the US' second largest roofing distributor with nearly $5 billion in annual roofing sales."

Furthermore, noted Zielenski, the purchase offers Beacon Roofing Supply the ability to increase its roofing sales through organic growth, as more than half of Allied Building Products' locations are in the Northeast and Midwest regions of the US. "Those parts of the US have a substantial number of homes and businesses with roofs that are nearing the end of their lifespans and will require replacement. As reroofing activity generates the large majority of roofing demand in the US, Beacon Roofing Supply will be well-positioned to distribute roofing to a much larger network of contractors."

In addition to expanding its presence in the roofing distribution market, Beacon Roofing Supply's purchase of Allied Building Products will greatly boost its sales of complementary building products, such as wallboard, acoustical ceiling tiles, siding, and windows and doors. While the large majority of Beacon Roofing Supply's sales are related to roofing, only about half of Allied Building Products' sales are derived from roofing.

Roofing distribution is a fairly concentrated market, which can limit growth opportunities for distributors, save for purchasing competitors, noted Zielenski. "However, the distribution market for other building materials is more fragmented." Thus, firms such as Beacon Roofing Supply can see substantial sales increases by offering such related building products as wallboard and ceilings. "For instance, ABC Supply -- one of Beacon Roofing Supply's main competitors -- was able to use its acquisition of L&W Supply to position itself not only as a leading supplier of roofing, but also as a major distributor of gypsum wallboard and ceiling products. Thus, Beacon Roofing Supply's purchase of Allied Building Products will enable it to reach not only those contractors who specialize in roofing installation, but perform a wide range of construction services."

More information about the Roofing Distribution Market in the US study is here: https://www.freedoniagroup.com/industry-study/roofing-distribution-market-in-the-us-by-sales-channel-market-and-product-3497.htm

For more information on the outlook of both the roofing and the overall construction industry in the US, check out the Construction and Building Products page featuring the following industry studies by The Freedonia Group:

Low-Slope Roofing in the US (July 2017)

Siding Distribution Market in the US (July 2017)

Asphalt Shingles in the US (May 2017)

Ceilings Market in the US (April 2017)

Roofing Distribution Market in the US (March 2017)

Roofing Underlay Market in the US (November 2016)

About The Freedonia Group – The Freedonia Group, a division of MarketResearch.com, is a leading international industrial research company publishing more than 100 studies annually. Since 1985 we have provided research to customers ranging in size from global conglomerates to one-person consulting firms. More than 90% of the industrial companies in the Fortune 500 use Freedonia Group research to help with their strategic planning. Each study includes product and market analyses and forecasts, in-depth discussions of important industry trends, and market share information. Chemical studies can be purchased at www.freedoniagroup.com and are also available on www.marketresearch.com and www.profound.com.

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SOURCE The Freedonia Group