Beacon Roofing Supply to Acquire Allied Building Products from CRH for $2.625 Billion in Cash
Strengthens Beacon's Position as the Largest Publicly Traded
Wholesale Roofing and
Significantly Expands Beacon's Geographic Footprint in
Provides for Beacon's Entry as a Major Supplier to the Interior
Expected to Be Immediately Accretive to Adjusted EPS and Accretive to GAAP EPS in Year Two
Beacon expects to finance the acquisition with approximately
Founded in 1950, Allied is headquartered in
The expanded geographic footprint will allow Beacon to enter new local
markets, particularly in
In a concurrent press release issued this morning by CRH,
Strategic and Financial Benefits of the Transaction
Expanded Exteriors Geographic Footprint: The expanded
geographic footprint will provide Beacon a presence in new markets -
New York, New Jerseyand 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, Coloradoand 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 millionin annual run-rate synergies within two years of closing.
Expected Financial Impact: Excluding year one incremental
transaction-related amortization of approximately
$70-80 millionand year one acquisition costs of approximately $65-75 million, Beacon expects the transaction will be immediately accretive to adjusted earnings per share by approximately $0.50-0.60in 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, 2017Adjusted EBITDA of Allied coupled with significant run rate synergies of $110 millionresults in a transaction purchase multiple of 8.7x.
Financing and Approvals
The transaction is currently expected to close on or around
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,
Citi is serving as a financial advisor to
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
Beacon Roofing Supply Acquisition of Allied
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
Founded in 1928,
Founded in 1978, Clayton, Dubilier & Rice is a private investment firm.
Since inception, CD&R has managed the investment of approximately
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.
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.
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