James Hardie sinks after $14b US deal
Make us a preferred source
Make us a preferred source on Google
More news: Shares in James Hardie Industries are down nearly 10% to $42.38 a share with investors wary after the building products manufacturer agreed to buy NYSE-listed outdoor living products maker AZEK for US$8.75 billion ($13.95 billion).
The Australian company will issue cash plus shares to AZEK shareholders, who will own 26% of the combined company. It will also list its shares on the NYSE after completion of the deal, which will also prompt a US$500 million share buyback.
James Hardie to acquire US-based AZEK for $14b
The news: Building products manufacturer James Hardie has agreed to buy NYSE-listed outdoor living products maker The AZEK Company Inc. for USD8.75 billion ($13.95 billion).
The numbers: Under the deal, AZEK shareholders will receive USD26.45 in cash and 1.0340 ordinary shares of James Hardie to be listed on the New York Stock Exchange for each share of AZEK common stock they own.
The stock and cash consideration represents a total value of USD56.88 per share, a 26% premium to AZEK’s volume-weighted average price over the 30 trading days prior to 21 March. On completion of the transaction, James Hardie and AZEK shareholders will own approximately 74% and 26% respectively of the combined company.
The context: James Hardie said the combination will create a leading exterior and outdoor living building products growth platform with efficient scale and profitability supported by leading brands driving material conversion. It expects annual growth rates of net sales and adjusted EBITDA to accelerate by more than 250 basis points and 300 basis points respectively, over the next five years. The transaction is also expected to be accretive to James Hardie’s cash earnings per share in the first full fiscal year. Once run-rate cost synergies are achieved, the combined company is expected to generate robust annual free cash flow of greater than $1 billion.
“This combination with AZEK is an extraordinary opportunity to accelerate our growth strategy, deliver enhanced and differentiated solutions to our customers and drive shareholder value,” James Hardie CEO Aaron Erter said.
Following the closing of the transaction, James Hardie’s ordinary shares will be listed on the NYSE and the company is expected to be eligible for broader index inclusion in the US in the future. It will maintain its current CDI listing and index inclusion on the ASX.
The source: ASX
