James Hardie Industries, an Australian building products company, has announced a cash and stock deal to acquire American outdoor products manufacturer AZEK Company Inc. (AZEK, Financial) for approximately $8.75 billion, including $386 million in debt. This marks the second major acquisition in the building supplies sector within a week. Previously, QXO Company revealed its plan to acquire Beacon Roofing Supply Inc. for about $11 billion, including debt.
The U.S. real estate market has been sluggish since mortgage rates began climbing from pandemic-era lows in 2022. Last year, the sales of existing homes in the U.S. dropped to the lowest level in nearly 30 years. Freddie Mac reported a slight increase in the average rate for a 30-year mortgage, which now stands at 6.67%.
Raymond James analyst Sam Darkatsh noted that the acquisition of Beacon Roofing Supply is beneficial for its shareholders amid real estate market uncertainties. Beacon is headquartered in Herndon, Virginia.
Under the terms of the James Hardie-AZEK acquisition, AZEK shareholders will receive $26.45 in cash and 1.034 shares of James Hardie common stock for each AZEK share they hold. AZEK is headquartered in Chicago. Post-transaction, James Hardie shareholders will own about 74% of the combined entity, while AZEK shareholders will hold 26%.
The merged company will focus on selling building products such as siding, trim, decking, railings, and pergolas. James Hardie CEO Aaron Erter stated that the acquisition is strategic as both companies excel in stimulating homeowner demand and offering innovative solutions for contractors.
Once finalized, James Hardie's common stock will be listed on the New York Stock Exchange. Both companies' boards have approved the deal, which is expected to close in the latter half of this year, pending AZEK shareholder approval. Before the market opened on Monday, AZEK's stock price surged over 23%.
