Owens Corning Acquires Masonite in $3.9 Billion Deal
Purchase expands OC’s position in branded residential products
Owens Corning said it expects to leverage both companies’ “best-in-class brands, extensive customer and channel knowledge, manufacturing excellence and material science expertise to grow Masonite’s top line, reaching adjusted EBITDA margins of approximately 20 percent.” The company said the acquisition increases OC’s total addressable market by $27 billion and creates a platform to drive new growth opportunities in other product adjacencies.
Image by Bryan Gottlieb
Owens Corning and Masonite International Corporation, a global provider of interior and exterior doors and door systems, announced Feb. 9 that the companies entered into a definitive agreement, under which Owens Corning will acquire all outstanding shares of Masonite for $133 per share, in cash.
OC said the purchase price represents approximately a 38 percent premium to Masonite’s closing share price on the NYSE, as of Feb. 8, which was approximately a “46 percent premium to Masonite’s 20-day volume-weighted average price.”
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.
OC said the addition of Masonite’s doors business creates “a new growth platform for Owens Corning, strengthening the company’s position in residential building materials and extending its offering of highly valued products and brands.”
The company added that by leveraging its “unique commercial capabilities and proven go-to-market model” serving contractors, builders and distributors, it expects to build on Masonite’s strong track record of innovation, brand quality and category excellence.
Founded in 1925, Masonite designs, manufactures and markets doors and door systems, with a vertically integrated manufacturing model serving repair, remodel and new construction demand. Masonite operates 64 manufacturing and distribution facilities, primarily in North America, and has more than 10,000 employees worldwide.
“We are excited by this opportunity to add a scalable new growth platform for our company,” said Brian Chambers, board chair and CEO of Owens Corning. “Masonite is a market leader that complements our existing residential interior and exterior product offering and has consistently demonstrated top-line growth and margin expansion.”
The purchase brings Masonite under the OC umbrella of interior and exterior products, and, with this transaction, said it will grow company revenue to 12.6 billion, with an adjusted EBITDA of $2.9 billion on a “synergized pro forma” basis.
“Our world-class team is transforming the door industry with differentiated solutions for the home,” said Howard Heckes, president and CEO of Masonite. “The combination with Owens Corning enables the acceleration of our ‘Doors That Do More’ strategy while delivering immediate and substantial value to our shareholders.”
Photo courtesy of Masonite
Morgan Stanley & Co. is acting as lead financial advisor to Owens Corning, while Lazard Freres & Co. LLC provides additional advice to the Owens Corning Board of Directors. Davis Polk & Wardwell LLP is acting as Owens Corning’s legal counsel and Stikeman Elliott LLP is acting as Owens Corning’s Canadian legal counsel.
Goldman Sachs is acting as the lead financial advisor for Masonite, with Jefferies also acting as financial advisor. Wachtell, Lipton, Rosen & Katz is acting as Masonite’s legal counsel and Cassels Brock & Blackwell, LLP is acting as Masonite’s Canadian legal counsel.
The transaction is expected to close in mid-2024, subject to Masonite shareholder approval, regulatory approvals and other customary closing conditions, including the issuance of interim and final orders by the Supreme Court of British Columbia approving the plan of arrangement.
Following the closing, Masonite will operate as a reportable segment and will maintain Masonite’s brands and presence in Tampa, Florida.
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