The Sterling Group Agrees to Sell Artisan Design Group to Lowe's Companies, Inc.

Rhea-AI Summary

Lowe's Companies (NYSE: LOW) has agreed to acquire Artisan Design Group (ADG) from The Sterling Group for $1.325 billion. ADG, headquartered in Dallas, is a leading nationwide provider of design, distribution, and installation services for interior surface finishes, operating 132 facilities across 18 states with over 3,200 personnel.

The acquisition will expand Lowe's Pro offering into a new distribution channel within a $50 billion market. With projections indicating a need for 18 million homes in the United States by 2033, new home construction is expected to drive Pro planned spending for the next decade.

Under Sterling's ownership since 2018, ADG completed 15 acquisitions. The transaction is expected to close in Q2 2025, subject to regulatory approvals and customary closing conditions.

Positive

• Strategic acquisition expanding into $50 billion market opportunity
• Access to ADG's extensive network of 132 facilities and 3,200 personnel
• Strengthens position in Pro planned spend segment
• Acquisition targets growing new home construction market
• ADG's strong customer satisfaction scores with top U.S. builders

Negative

• Significant capital outlay of $1.325 billion
• Transaction subject to regulatory approval risks
• Integration challenges of large acquisition with 132 facilities

Insights

Financial Analyst

Lowe's $1.325 billion acquisition of Artisan Design Group represents a significant strategic expansion into the professional homebuilder channel. This transaction gives Lowe's immediate access to a highly fragmented $50 billion market through ADG's established network spanning 132 facilities across 18 states with 3,200 personnel.

The strategic rationale is compelling and forward-looking. With projections indicating 18 million new homes needed by 2033, Lowe's is positioning itself to capitalize on sustained demand in new home construction. ADG's specialized capabilities in design, distribution, and installation of interior finishes (flooring, cabinets, countertops) provides Lowe's with valuable services that complement its existing product offerings.

This acquisition materially advances Lowe's Pro strategy by securing direct relationships with homebuilders and property managers – customer segments that typically require specialized service models different from Lowe's traditional retail approach. The transaction creates opportunities for cross-selling additional building materials through ADG's established builder relationships while potentially leveraging Lowe's purchasing power to enhance ADG's competitive positioning.

The ~1% of Lowe's market cap deployed for this acquisition represents a meaningful but measured financial commitment to expand its total addressable market by approximately 40% when considering the additional $50 billion market opportunity referenced.

M&A Specialist

This acquisition exemplifies vertical integration strategy in the building products sector, with Lowe's extending its value chain to capture specialized services that directly connect to professional customers. The Sterling Group's successful playbook of consolidating 15 founder/entrepreneur-owned businesses created a scaled platform that would have been challenging for Lowe's to replicate organically.

The $1.325 billion purchase price likely reflects a premium valuation for ADG's established builder relationships and operational expertise in a fragmented market. These intangible assets are particularly valuable as they create barriers to entry that protect margins and customer retention.

Integration execution will be critical to realizing the full potential of this transaction. Lowe's will need to balance preserving ADG's entrepreneurial culture and customer-centric approach (noted for having "best-in-class customer satisfaction scores from top builders") while introducing operational efficiencies from its scale advantages.

The transaction structure appears straightforward, with a clean exit for The Sterling Group after their typical private equity holding period. Regulatory approval seems likely given the fragmented nature of the market, though the Q2 2025 closing timeline suggests some standard regulatory review is anticipated.

For Lowe's shareholders, this represents a significant strategic bet on the professional segment that diversifies the company's revenue streams beyond DIY retail customers and positions it to benefit from the anticipated housing construction boom driven by the current housing shortage.

Culmination of Six Year Period of Growth and Strategic Expansion in Partnership with Sterling

HOUSTON, April 14, 2025 /PRNewswire/ -- The Sterling Group ("Sterling"), a middle market private equity firm, announced today that it has agreed to sell Artisan Design Group ("ADG" or the "Company") to Lowe's Companies, Inc. (NYSE: LOW) for $1.325 billion. ADG is a leading nationwide provider of design, distribution and installation services for interior surface finishes, including flooring, cabinets and countertops, to national, regional, and local homebuilders and property managers.

Headquartered in Dallas, Texas, ADG operates 132 distribution, design and service facilities and coordinates installation through over 3,200 personnel across 18 states. "Since initially partnering with co-founders Larry Barr and Wayne Joseph in 2018, Sterling has been proud to support ADG during a period of significant growth and expansion," said Johann Friese, Director at The Sterling Group. Under Sterling's ownership, ADG has completed 15 acquisitions, each of which was founder or entrepreneur owned. Sterling has a 40+ year history of partnering with founder- and family-owned industrial businesses.

ADG will expand Lowe's Pro offering into a new distribution channel within a highly fragmented, approximately $50 billion market. "With more than 18 million homes needed in the United States by 2033, we expect new home construction will be a major driver of Pro planned spend for the next decade. The acquisition of ADG allows us to build on our momentum with Pro planned spend and is expected to expand our total addressable market by approximately $50 billion," said Marvin R. Ellison, Lowe's chairman, president and CEO. "With its strong, customer-centric operating model, ADG has become an industry leader with best-in-class customer satisfaction scores from the top builders in the U.S. We look forward to welcoming the ADG team to Lowe's, and, through our combined capabilities, enhancing our offering to our expanded Pro customer base."

"We are thrilled for ADG to join forces with Lowe's," said Steve Margolius, ADG's CEO. "Our leading position in flooring, cabinets and countertops, combined with Lowe's scale and category breadth, will allow us to continue on our growth trajectory while providing an even more differentiated and comprehensive offering to the builders and property managers we serve today."

The transaction is expected to close in the second quarter of 2025, subject to receipt of requisite regulatory approvals and satisfaction of other customary closing conditions. RBC Capital Markets is acting as lead financial advisor to ADG. Goldman Sachs is also acting as financial advisor to ADG. Latham & Watkins LLP is acting as legal advisor to ADG.

About Artisan Design Group

ADG provides design, distribution, and installation services for interior finishes including flooring, cabinets, and countertops to national and local homebuilders and property managers. Formed in 2016 by the merging of two industry leaders, ADG currently operates 132 distribution, design, and service facilities in 18 states, and is headquartered in Dallas, Texas.

About The Sterling Group
Founded in 1982, The Sterling Group is a private equity and private credit investment firm that targets investments in basic manufacturing, distribution, and industrial services companies. Typical enterprise values of these companies at initial formation range from $100 million to $750 million. Sterling has sponsored the buyout of 74 platform companies and numerous add-on acquisitions for a total transaction value of over $25 billion. Sterling currently has $9.4 billion of assets under management. For further information, please visit www.sterling-group.com.

Past performance is no guarantee of future results and all investments are subject to loss.

About Lowe's

Lowe's is a FORTUNE^® 50 home improvement company serving approximately 16 million customer transactions a week in the United States. With total fiscal year 2024 sales of more than $83 billion, Lowe's operates over 1,700 home improvement stores and employs approximately 300,000 associates. Based in Mooresville, N.C., Lowe's supports the communities it serves through programs focused on creating safe, affordable housing, improving community spaces, helping to develop the next generation of skilled trade experts and providing disaster relief to communities in need. For more information, visit Lowes.com.

Disclosure Regarding Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as "believe", "expect", "anticipate", "plan", "desire", "project", "estimate", "intend", "will", "should", "could", "would", "may", "strategy", "potential", "opportunity", "outlook", "scenario", "guidance", and similar expressions are forward-looking statements. Forward-looking statements involve, among other things, expectations, projections and assumptions about future financial and operating results, business outlook, priorities, sales growth, shareholder value, the housing market, the home improvement industry, demand for products and services including customer acceptance of new offerings and initiatives. Such statements involve risks and uncertainties, and we can give no assurance that they will prove to be correct. Actual results may differ materially from those expressed or implied in such statements.

A wide variety of potential risks, uncertainties, and other factors could materially affect the ability to achieve the results either expressed or implied by these forward-looking statements including, but not limited to, the occurrence of any event or other circumstance that could give rise to the right of one or both of the parties to terminate the merger agreement between Lowe's and ADG, the failure to obtain the requisite approvals or to satisfy the other conditions to the proposed merger on a timely basis or at all, the possibility that the anticipated benefits and synergies of the merger are not realized when expected, or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of changes in general economic conditions. All such forward-looking statements speak only as of the date they are made, and Lowe's does not undertake any obligation to update these statements other than as required by law.

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SOURCE The Sterling Group, L.P.

FAQ

How much is Lowe's (LOW) paying to acquire Artisan Design Group?

Lowe's is acquiring Artisan Design Group for $1.325 billion.

What market opportunity does the ADG acquisition present for Lowe's (LOW)?

The acquisition expands Lowe's total addressable market by approximately $50 billion in the fragmented interior surface finishes sector.

When is the Lowe's (LOW) acquisition of ADG expected to close?

The transaction is expected to close in the second quarter of 2025.

How many facilities does ADG operate that Lowe's (LOW) will acquire?

ADG operates 132 distribution, design and service facilities across 18 states.

What is the projected housing demand driving Lowe's (LOW) acquisition strategy?

The U.S. is projected to need 18 million new homes by 2033, driving Pro planned spend for the next decade.