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
HERNDON, Va.--(BUSINESS WIRE)--
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
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
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
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
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.
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
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
Beacon Roofing Supply Acquisition of Allied Building Products
Thursday, August 24, 2017
8:00 a.m. ET
(live and replay)
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.
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.
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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170823006149/en/
Beacon Roofing Supply, Inc.
Joseph Nowicki, 571-323-3940
VP & CFO
Source: Beacon Roofing Supply, Inc.
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