Owens Corning, a key player in the building and construction materials industry, has announced its acquisition of Masonite International Corporation, a manufacturer of interior and exterior doors. The $3.9 billion transaction will see Owens Corning purchasing Masonite at $133.00 per share in cash, which represents a 38% and 46% premium over Masonite's closing share price on February 8, 2024, and its 20-day volume-weighted average price, respectively.
This acquisition aims to enhance Owens Corning's presence in the residential products sector and grants access to a $27 billion market. The merger is expected to increase Owens Corning's revenue to approximately $12.6 billion, with an adjusted EBITDA of $2.9 billion, factoring in cost synergies from the merger estimated at $125 million.
Aligned with Owens Corning's capital allocation strategy, the deal is projected to maintain a net debt-to-EBITDA ratio within the 2-3x range, with a reduction goal to 2.0x by the end of 2024. Additionally, the acquisition is anticipated to contribute to a low double-digit percentage increase in free cash flow by the end of 2025.
Concurrently with the acquisition, Owens Corning has initiated a strategic review of its glass reinforcements business within its Composites segment.
Brian Chambers, CEO of Owens Corning, highlighted the acquisition as a strategic addition to the company's portfolio, noting Masonite's market leadership. Howard Heckes, CEO of Masonite, pointed to the merger's potential to deliver enhanced value to shareholders and customers, while accelerating growth strategies.
Pending shareholder and regulatory approvals, the transaction is expected to close in mid-2024 and will be financed through cash on hand and a $3 billion debt financing commitment from Morgan Stanley Senior Funding, Inc.
Following the acquisition, Masonite will operate as a distinct segment within Owens Corning, retaining its brand and Tampa, Florida presence.
