Strengthens Beacon’s Position as the Largest
Publicly Traded Wholesale Roofing and Building Materials
Distributor in North America with Approximately $7 Billion in
Revenue Across 593 Locations
Significantly Expands Beacon’s Geographic
Footprint in New York and New Jersey and Other Major U.S.
Markets
Provides for Beacon’s Entry as a Major Supplier
to the Interior Building Products Market
$110 Million in Expected Annual Run-Rate
Synergies
Expected to Be Immediately Accretive to
Adjusted EPS and Accretive to GAAP EPS in Year Two
Beacon Roofing Supply, Inc. (Nasdaq: BECN) (“Beacon” or the
“Company”), the largest publicly traded distributor of roofing and
complementary building products in North America, today announced
that the Company has entered into a definitive purchase agreement
to acquire Allied Building Products Corp. (“Allied”), one of the
country’s largest exterior and interior building products
distributors, from global diversified building products group CRH
plc (LSE: CRH, ISE: CRG, NYSE: CRH) (“CRH”) for $2.625 billion in
cash.
Beacon expects to finance the acquisition with approximately
$2.2 billion of debt financing through an upsized ABL revolving
credit facility, an upsized term loan B facility, a new unsecured
senior note and approximately $500 million of committed convertible
preferred equity financing from an entity affiliated with the
investment firm Clayton, Dubilier & Rice (“CD&R”),
which in October 2015 sold Roofing Supply Group (“RSG”) to Beacon.
The parties currently expect to consummate the transaction on or
around January 2, 2018, subject to satisfaction of customary
closing conditions.
Founded in 1950, Allied is headquartered in East Rutherford, New
Jersey, and distributes products across 208 locations in 31 states.
These include exterior products, such as roofing, siding, windows
and doors, and interior products, such as wallboard and suspended
ceiling systems. The combination of Beacon and Allied will make
Beacon one of the largest publicly traded wholesale building
materials distributors in North America with pro forma revenues of
approximately $7 billion and 593 branches in all 50 states and 6
provinces across Canada. Beacon will also become the fourth largest
wallboard and acoustical ceiling tile wholesale distributor in the
U.S., with more than $1 billion of revenue in the interior market
category. Beacon and Allied have more than 150 years of combined
experience providing service excellence to customers in the
building products industry.
The expanded geographic footprint will allow Beacon to enter new
local markets, particularly in New York, New Jersey and the upper
Midwest. In addition, acquiring Allied allows Beacon to further
strengthen the company’s position as a leader in roofing products
distribution, while accelerating growth in other key product
categories, including siding, windows, doors, decking, trim,
waterproofing, insulation and solar.
Robert R. Buck, Chairman of Beacon’s Board of Directors,
emphasized the strategic rationale of the transaction and stated:
“Allied is among the most established and respected companies in
our industry, and we are proud that, through this acquisition,
Beacon will become one of North America’s largest publicly traded
building materials distributors and will operate locations in all
50 states. I want to thank CRH for entrusting Beacon with the
future success of Allied and its dedicated employees, who have been
part of the CRH family for more than 20 years. The Allied
acquisition also presents a great opportunity for CD&R to again
become a major shareholder in Beacon. Today is of great
significance in Beacon’s history and for the future of building
products distribution.”
Paul Isabella, Beacon’s President and Chief Executive Officer,
commented: “I would like to welcome the more than 3,500 employees
from Allied to the Beacon family. We are thrilled to partner with
such a loyal and dedicated workforce that shares our commitment to
superior customer service and high levels of performance. We are
also excited to become a significant player in the robust, growing
and still-consolidating interior products market. Together, we will
leverage the strengths of both companies, while remaining committed
to preserving the deep customer relationships that we have each
cultivated over 150 years of combined experience. This is a
milestone moment in the long and successful histories of both
companies.”
CD&R Partner Nathan Sleeper commented: “We are excited to
participate in the strategic combination of these two industry
leaders. We developed a strong confidence in the Beacon Roofing
Supply management team during our prior ownership, as they
successfully acquired and integrated RSG, and we welcome the
opportunity to invest again in Beacon’s future growth and success.
I look forward to rejoining Beacon’s Board of Directors and playing
a supportive role as the Company realizes the significant value of
this transaction.”
In a concurrent press release issued this morning by CRH, Albert
Manifold, Chief Executive Officer of CRH, stated: “We are pleased
that our long-standing Allied business is being acquired by a
highly-respected industry player and we wish our colleagues every
success as they enter this new phase of their development.”
Strategic and Financial Benefits of the Transaction
- Expanded Exteriors Geographic
Footprint: The expanded geographic footprint will provide
Beacon a presence in new markets – particularly in New York, New
Jersey and the upper Midwest. With this transaction, Beacon will
operate locations in all 50 states and will expand its presence in
other key markets including Texas, Florida, Colorado and
California.
- Significant Customer Service
Benefits and Offerings: Customers from both companies are
expected to experience multiple benefits working with the combined
company, from access to a wider range of products to improved
product availability, service, delivery and technology
solutions.
- Expansion into the Interior
Business: The combination will provide Beacon with entry into
the adjacent interior business, including wallboard and suspended
ceiling products, and will strengthen the combined company’s
competitive positioning through extended offerings. The interior
category shares many attractive investment qualities and
characteristics with the roofing products distribution
business.
- Enhanced Growth Strategies:
Beacon remains committed to increasing market share through organic
growth focusing on a wide range of roofing and complementary
products. Through the combination, Beacon will be well-positioned
to leverage Allied’s various market advantages, including its
established private-label business and robust e-commerce platform,
to further Beacon’s organic growth strategies.
- Significant Cost Synergies
Expected: The combined company is expected to realize $110
million in annual run-rate synergies within two years of
closing.
- Expected Financial Impact:
Excluding year one incremental transaction-related amortization of
approximately $70-80 million and year one acquisition costs of
approximately $65-75 million, Beacon expects the transaction will
be immediately accretive to adjusted earnings per share by
approximately $0.50-0.60 in year one. Beacon expects the
transaction will be accretive to GAAP earnings per share in year
two. Following the close, Beacon expects rapid de-levering to
result from the anticipated combined EBITDA of the new Beacon
entity, realization of cost savings and strong pro forma free cash
flow generation. The trailing twelve month June 30, 2017 Adjusted
EBITDA of Allied coupled with significant run rate synergies of
$110 million results in a transaction purchase multiple of
8.7x.
Financing and Approvals
The transaction is currently expected to close on or around
January 2, 2018, and is subject to the expiration or termination of
the applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, as well as other
customary closing conditions.
Beacon will fund the purchase price through an upsized ABL
revolving credit facility, upsized term loan B facility, a senior
unsecured bond offering and by issuing Series A Convertible
Preferred Shares to an investment vehicle owned by investment firm
CD&R.
Management and Board
Following completion of the transaction, Mr. Isabella will
continue to serve as President and Chief Executive Officer of the
combined company, and Mr. Buck will remain Chairman of the Board of
Directors. Mr. Feury, Chief Executive Officer of Allied, will
continue in a key executive leadership role, focused on integration
and growth, reporting to Mr. Isabella. Mr. Philip Knisely, an
advisor to the CD&R Funds, will remain on Beacon’s Board of
Directors. Mr. Sleeper, a Partner at CD&R, will rejoin Beacon’s
Board of Directors.
Advisors
Citi is serving as a financial advisor to Beacon and Sidley
Austin LLP is serving as a legal advisor. J.P. Morgan Limited acted
as a financial advisor to CRH plc and Kilpatrick Townsend &
Stockton is serving as a legal advisor. Debevoise & Plimpton
LLP is acting as counsel to CD&R.
Citi and Wells Fargo are acting as joint lead arrangers on the
debt financing.
Conference Call and Presentation
Beacon will host a webcast and conference call today at 8:00
a.m. ET to discuss the transaction. The webcast link and call-in
details are as follows:
What: Beacon Roofing Supply Acquisition of Allied
Building Products Conference Call When: Thursday, August 24, 2017
Time: 8:00 a.m. ET Webcast:
http://ir.beaconroofingsupply.com/events.cfm (live and replay)
Live Call: 720-634-9063, Conf. ID #75502983
There will be a slide presentation available on the website as
well. To assure timely access, conference call participants should
dial in prior to the 8:00 a.m. ET start time.
About Beacon Roofing Supply,
Inc.
Founded in 1928, Beacon Roofing Supply, Inc. (Beacon) (Nasdaq:
BECN) is the largest publicly traded distributor of residential and
commercial roofing materials and complementary building products,
operating 385 branches throughout 48 states in the U.S. and 6
provinces in Canada. To learn more about Beacon and its family of
regional brands, please visit www.becn.com.
About Allied Building Products
Corp.
Allied Building Products Corp. (Allied) was established in
Jersey City, NJ in 1950 as a family-operated roofing and custom
sheet metal fabrication business. Today, Allied operates 208
locations coast to coast, maintains a fleet of more than 2,785
vehicles, and employs more than 3,500 committed individuals. For
more information about Allied, please visit
www.alliedbuilding.com.
About CRH plc
CRH plc (LSE: CRH, ISE: CRG, NYSE: CRH) (CRH) is a leading
global diversified building materials group, employing 87,000
people at 3,800 operating locations in 31 countries worldwide. With
a market capitalisation of €26 billion (July 2017), CRH is the
largest building materials company in North America and the second
largest worldwide. The Group has leadership positions in Europe as
well as established strategic positions in the emerging economic
regions of Asia and South America. CRH is committed to improving
the built environment through the delivery of superior materials
and products for the construction and maintenance of
infrastructure, housing, and commercial projects. A Fortune 500
company, CRH is a constituent member of the FTSE 100 index, the
EURO STOXX 50 index, and the ISEQ 20. CRH’s American Depositary
Shares are listed on the NYSE. For more information, visit
www.crh.com.
About CD&R
Founded in 1978, Clayton, Dubilier & Rice is a private
investment firm. Since inception, CD&R has managed the
investment of approximately $24 billion in 74 companies
representing a broad range of industries with an aggregate
transaction value of more than $100 billion. The Firm has offices
in New York and London. For more information, visit
www.cdr-inc.com.
Forward-Looking
Statements
This release contains information about management's view of
Beacon's future expectations, plans, and prospects that constitute
forward-looking statements for purposes of the safe harbor
provisions under the Private Securities Litigation Reform Act of
1995. You can identify forward-looking statements by the fact that
they do not relate strictly to historic or current facts and often
use words such as “anticipate”, “estimate”, “expect”, “believe”,
“will likely result”, “outlook”, “project” and other words and
expressions of similar meaning. Actual results may differ
materially from those indicated by such forward-looking statements
as a result of various important factors, including, but not
limited to, those set forth in the "Risk Factors" section of
Beacon's latest Form 10-K. In addition, numerous factors could
cause actual results with respect to the proposed transaction to
differ materially from those in the forward-looking statements,
including without limitation, the possibility that the expected
synergies and cost savings and financial impacts from the proposed
transaction will not be realized, or will not be realized within
the expected time period; the risk that the Beacon and Allied
businesses will not be integrated successfully; the ability to
obtain governmental approvals of the proposed transaction on the
proposed terms and schedule contemplated by the parties; disruption
from the proposed transaction making it more difficult to maintain
business and operational relationships; the risk of customer
attrition; the possibility that the proposed transaction does not
close, including, but not limited to, failure to satisfy the
closing conditions; and the ability to obtain the debt and equity
financings contemplated to fund the cash purchase price for the
proposed transaction and the terms of such financings. The
forward-looking statements included in this press release represent
Beacon's views as of the date of this press release and these views
could change. However, while Beacon may elect to update these
forward-looking statements at some point, Beacon specifically
disclaims any obligation to do so, other than as required by
federal securities laws. These forward-looking statements should
not be relied upon as representing Beacon's views as of any date
subsequent to the date of this press release.
This release does not constitute an offer of any securities for
sale.
Non-GAAP Measures
This press release contains a price multiple of Adjusted EBITDA
of Allied, which is a measure not presented in accordance with
generally accepted accounting principles (“GAAP"). Adjusted EBITDA
is defined as net income plus interest expense (net of interest
income), income taxes, depreciation and amortization, adjustments
for corporate costs, and non-recurring costs. Although the
company believes this measure provides a useful representation of
performance, non-GAAP financial measures should not be considered
in isolation or as a substitute for any items calculated in
accordance with GAAP.
In addition, this press release includes projections regarding
the expected accretive impact of the proposed transaction to
Adjusted EPS, based on internal forecasts of Adjusted EPS, which
forecasts are non-GAAP financial measures and are derived by
excluding transaction related expenses and incremental deal-related
intangibles amortization. These accretion projections also should
not be considered a substitute for GAAP measures. The determination
of the amounts that are excluded in making the accretion
calculations are a matter of management judgment.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170823006149/en/
Beacon Roofing Supply, Inc.Joseph Nowicki, 571-323-3940Executive
VP & CFOJNowicki@becn.comorCD&RDan Jacobs,
212-407-5218djacobs@cdr-inc.comorMediaLEVICKJohn Lovallo,
917-612-8419jlovallo@levick.com
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