This company just made a huge bet on the housing recovery and now its stock is exploding higher

Joplin Missouri Sky Home House Building ConstructionJoe Raedle/Getty ImagesJeremy Nelson rebuilds his home after it was destroyed when a tornado hit in Joplin, Missouri.

Shares of Builders FirstSource are going bananas.

The Dallas-based building materials company announced plans to acquire ProBuild Holdings for approximately $US1.63 billion in cash.

In a statement, the companies said now is the perfect time to combine, to capitalise on the US housing recovery.

“We are very pleased to announce this compelling combination with ProBuild to create a more diversified company with enhanced scale and an improved geographic footprint that will drive significant value for our customers and stockholders,” Builders FirstSource CEO Floyd Sherman said in the statement.

“As the U.S. housing market continues its recovery, we believe now is the ideal time to position Builders FirstSource for its next phase of growth and value creation.”

The combined company would have had revenues of around $US6.1 billion in 2014; Builders FirstSource reported 2014 revenue of $US1.6 billion.

The combined company will generate between $US100 million and $US120 million in cost-saving synergies, which as we’ve highlighted, can come with job cuts.

The deal is expected to close in the second half of 2015.

Here’s the chart showing the spike in trading:

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