Beacon (the “Company”) announced the execution of a definitive agreement to sell its interior products business, consisting of 81 branch locations where it distributes construction products including wallboard, acoustical ceilings, steel framing and insulation to both residential and commercial contractors (“Interior Products” or “Interiors”), to affiliates of American Securities LLC, a leading U.S. private equity firm. The cash purchase price of $850 million is subject to certain net working capital and other adjustments, with the transaction expected to close during Beacon’s fiscal 2021 second quarter, subject to customary regulatory approvals. The Company intends to use the anticipated after-tax proceeds of approximately $750 million from this divestiture to reduce net leverage and strengthen its balance sheet.
“Today’s announcement represents an important strategic decision for Beacon,” said Julian Francis, Beacon’s President and Chief Executive Officer. “After undertaking a thorough analysis, we determined that a divestiture of Interior Products is in the best interests of our shareholders, as well as our Interiors customers and associates. This transaction will substantially accelerate our efforts to improve our balance sheet, reduce net leverage and provide the financial flexibility to pursue strategic growth initiatives in our core exteriors business to drive shareholder value. We are excited about our start to fiscal 2021, especially the growth we are seeing in residential roofing sales. The Interior Products divestiture will allow us to focus entirely on driving growth and profitability in our core exteriors business.”
Kevin Penn, a Managing Director of American Securities, stated, “We are excited to have reached an agreement to acquire Beacon’s Interior Products business. Following the November announcement of our take-private of Foundation Building Materials (NYSE: FBM), this follow-on transaction represents an exciting opportunity to combine two companies that have made customer service their highest priority. The combined company’s expanded geographic presence across the U.S. and Canada will enhance its partnership with customers, vendors, and team members. We look forward to closing the transaction early next year and integrating these two great companies.”
During fiscal 2020, Interior Products generated $1.03 billion in net sales, a net loss of $11 million, and Adjusted EBITDA of $73 million. The Company intends to update its fiscal 2021 outlook, reflecting the divestiture of Interior Products, as part of its fiscal 2021 first quarter earnings release.
Goldman Sachs served as sole financial advisor to Beacon, and Sidley Austin LLP and Potter Anderson & Corroon LLP acted as legal advisors to Beacon on the transaction. Weil, Gotshal & Manges LLP served as legal advisor to American Securities on the transaction.
Please see the included financial table for a reconciliation of Interior Products Adjusted EBITDA, a non-GAAP financial measure, to the most directly comparable GAAP financial measure.
- $850 million purchase price provides attractive valuation for Beacon’s Interior Products business
- Significantly strengthens balance sheet and accelerates achievement of net leverage target
- Concentrates strategic growth and margin enhancement initiatives on residential and commercial roofing and complementary exterior products
- Leverages company’s key operating strengths, enhances leadership focus and provides flexibility to pursue growth opportunities in its core business