Building Materials Holding Corporation Agrees to Purchase 49% Interest in Knipp Brothers.

SAN FRANCISCO--(BUSINESS WIRE)--March 24, 1999--Building Materials Holding Corp. (Nasdaq:BMHC) today announced that it has entered into a definitive agreement to acquire a 49% interest in Knipp Brothers, a framing company with operations in Phoenix and Tucson, Ariz., and Las Vegas, which had 1998 annual sales of approximately $115 million.

The transaction is expected to close in the second quarter of 1999. Certain assets of the BMHC's Phoenix facility will become part of the transaction.

"The purchase of a significant interest in Knipp Brothers is exactly the type of transaction made possible by BMHC's holding company structure," said Robert E. Mellor, president and chief executive officer.

"Entering into the venture with Knipp Brothers is a logical extension of BMHC's growth strategy, which focuses on selling more value-added products and providing superior customer services to the professional building industry.

"In the growing Phoenix, Tucson, and Las Vegas building markets in which Knipp Brothers currently operates, professional builders are seeking building materials distributors that can provide them with full-service capabilities, together with lumber packages and value-added products, including framing.

"The combination of BMHC's existing Phoenix building materials operation with Knipp Brothers' framing business in that region should enhance market penetration. In Las Vegas, the plan calls for the addition of a center to Knipp Brothers' framing operations to create a full-service capability similar to what we are establishing in the Phoenix market."

Larry Knipp, chief executive officer of Knipp Brothers stated, "The venture with BMHC provides Knipp Brothers the opportunity to capitalize on BMHC's buying power, distribution expertise and additional product offerings, such as millwork and windows, for the benefit of customers."

Mellor continued, "Knipp Brothers provides the same high-quality and customer service that BMHC customers have come to expect and is therefore an excellent complement to BMHC's core business. Larry Knipp and his experienced management team will continue to manage the operation. Knipp Brothers' employee base of more than 1,500 employees should have growth and advancement opportunities with this transaction.

"Looking forward, we see additional opportunities to expand this venture. Framing capabilities are becoming increasingly important to customers in the building materials industry, and by offering these services in addition to lumber packages and other value-added products, we believe this will attract new customers and increase sales per building permit.

"We anticipate that the strategic and financial benefits of this transaction for the Company will be significant."

The purchase price for the 49% interest is expected to be in the range of $28 million to $33 million. The transaction contemplated by the definitive agreement is subject to customary closing conditions. Under the agreement, BMHC will have the right to acquire the remaining 51% interest in Knipp Brothers. Larry Knipp will have a corresponding right to require BMHC to purchase Knipp Brothers' 51% interest after five years.

Certain statements made in this news release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors are discussed in detail in Building Materials Holding Corp.'s Form 10-K for the fiscal year ended December 31, 1997. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained in the Annual Report on Form 10-K or this news release.

Building Materials Holding Corp., through its wholly owned subsidiary BMC West Corp., is a leading distributor of building materials to professional new residential and commercial and industrial contractors as well as professional repair and remodel contractors.