(Reuters) - Private equity firm AEA Investors LP is in advanced talks to acquire Gypsum Management and Supply Inc (GMS), a privately held maker of specialty building materials, for more than $700 million, according to three people familiar with the matter.
AEA outbid other private equity firms vying for GMS, including TPG Capital LP and Advent International Corp, the people said this week, cautioning that negotiations had not yet been finalized.
The people asked not to be identified because the talks are confidential. AEA, GMS and TPG did not respond to requests for comment while Advent declined to comment.
The sale of GMS -- the largest independent distributor of drywall, acoustical and other specialty building materials in the United States -- comes as the U.S. housing market rebounds from the trough of the financial crisis.
Earlier this week, Continental Building Products Inc (CBPX.N), a gypsum business that private equity firm Lone Star Funds bought last year from cement maker Lafarge SA (LAFP.PA), raised $165.2 million in an initial public offering. Its shares soared in their market debut on Wednesday.
A seasoned investor in the sector, AEA last year sold another building products maker, CPG International Inc, to Ares Management LLC and Ontario Teachers Pension Plan for about $1.5 billion.
GMS operates in 26 states, through a network of 43 subsidiary companies and more than 130 distribution centers, according to its website.
(Reporting by Greg Roumeliotis and Soyoung Kim in New York; Editing by Leslie Adler)