Building Materials Supplier Owens Corning Agrees To Buy Masonite In $3.9B Deal, Expects $13B Revenue Boost

Friday, building and construction materials player Owens Corning Inc OC agreed to acquire Masonite International Corporation DOOR for $133.00 per share in cash, representing an approximate 38% premium to Masonite’s closing share price on February 8.

The implied transaction value is approximately $3.9 billion, implying a purchase multiple of approximately 8.6x 2023E adjusted EBITDA2 or 6.8x when including synergies of $125 million.

Founded in 1925, Masonite designs, manufactures, and markets doors and door systems, with a vertically integrated manufacturing model serving both repair and remodel and new construction demand. 

Masonite operates 64 manufacturing and distribution facilities, primarily in North America, with over 10,000 employees globally.

With the acquisition, Owens Corning’s revenue generated from North American residential applications will grow to 60% of its total revenue.

The acquisition also increases Owens Corning’s total addressable market by $27 billion.

With this transaction, Owens Corning grows revenue to $12.6 billion, with adjusted EBITDA of $2.9 billion on a synergized pro forma basis and reduced ongoing capital intensity. 

On a synergized basis, the acquisition is expected to be a low double-digit percentage accretive to free cash flow by the end of 2025. 

After accounting for transaction financing, Owens Corning expects net debt-to-EBITDA to be well within its stated 2-3x target range, deleveraging to 2.0x by the end of 2024. 

The transaction is expected to close mid-2024.

The transaction will be financed by cash on hand and committed debt financing of $3 billion provided by Morgan Stanley Senior Funding Inc.

Masonite terminated its previously announced definitive merger agreement in January to acquire PGT Innovations Inc PGT. Masonite received a termination fee of $84 million. 

Masonite decided not to submit a revised offer when PGT Innovations notified that the revised proposal from MITER Brands was a “superior proposal.” 

Concurrently, Owens Corning will review strategic alternatives for its global glass reinforcements business.

The business, which operates within the company’s Composites segment, manufactures, fabricates, and sells glass fiber reinforcements in various product forms.

The business generates approximately $1.3 billion in annual revenues and operates in 11 countries with 18 manufacturing facilities. The business supplies glass fiber products for wind energy, infrastructure, industrial, transportation, and consumer markets applications.

Price Action: OC stock is down 7.84% at $146.98, and DOOR shares are up 35.0% at $130.42 on the last check Friday.

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