James Hardie To Acquire AZEK In $8.75 Billion Deal, Expanding Its Grip On Outdoor Living Market; JHX Stock Slips

Shares of fiber cement and fiber gypsum building solutions provider James Hardie Industries plc JHX are trading lower in premarket on Monday.

The company has entered into an agreement to acquire The AZEK Company Inc. AZEK in a transaction valued at $8.75 billion.

The agreement will be structured with a combination of cash and shares of James Hardie, while also taking on AZEK’s net debt of around $386 million.

AZEK shareholders will receive $26.45 in cash and 1.0340 ordinary shares of James Hardie to be listed on the New York Stock Exchange for each share. The stock and cash consideration represents a total per share value of $56.88, representing a premium of over 37% to the last closing price of $41.39 on Friday.

The acquisition is expected to strengthen the combined company’s position in the exterior and outdoor living product market, expanding its addressable market in North America to $23 billion.

The deal is anticipated to be finalized by the second half of 2025, subject to regulatory approvals and shareholder consent.

“We are uniting two highly complementary companies with large material conversion opportunities and shared cultures centered around providing winning solutions to our customers and contractors. Together, we will be well positioned to drive sustained above market growth as a leader across attractive categories for the exterior of the home,” said James Hardie CEO Aaron Erter.

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AZEK has consistently reported more than 15% annual sales growth in its residential sector over the last seven years. By integrating AZEK, James Hardie will expand its product range to include exterior trim, siding, decking, railing, and pergolas, offering homeowners and contractors sustainable solutions.

The strategic step is expected to improve both companies’ sales and EBITDA growth, strengthening James Hardie’s revenue over the next five years.

James Hardie anticipates generating at least $350 million in additional annual adjusted EBITDA, driven by $125 million in cost synergies and $500 million in commercial synergies.

Upon closing of the deal, Aaron Erter, CEO of James Hardie, will continue as CEO of the combined company. Rachel Wilson will remain CFO.

Other key leadership changes include the addition of Howard Heckes, Gary Hendrickson, and Jesse Singh to the board of directors.

Upon completion of the transaction, James Hardie and AZEK shareholders are expected to own approximately 74% and 26%, respectively, of the combined company.

Following the closing of the transaction, James Hardie’s ordinary shares will be listed on the NYSE and James Hardie is expected to be eligible for broader index inclusion in the U.S. in the future.

James Hardie intends to fund the cash portion of the transaction through debt financing. It has secured a fully committed bridge financing facility led by Bank of America and Jefferies LLC. James Hardie held $557.5 million in cash and equivalents as of December 31, 2024.

Outlook Reaffirmed: James Hardie today reaffirmed its fiscal year 2025 guidance provided on November 13, 2024, for North American volume and EBIT Margin, as well as Adjusted net income, not including any acquisition related costs.

James Hardie still sees FY25 North America volumes of at least 2.95 billion standard feet and North America EBIT margin of at least 29.3%.

AZEK also reaffirmed all elements of its full-year fiscal 2025 and second quarter of fiscal 2025 outlook provided on February 4, 2025.

Price Action: JHX shares traded lower by 11.2% at $26.00, while AZEK stock is up 23.5% at $51.12 in premarket at last check Monday.

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