James Hardie Industries, an Australian company specializing in building products, has announced its acquisition of the U.S.-based outdoor products manufacturer AZEK in a deal estimated to be worth about $8.75 billion, accounting for $386 million in debt. This acquisition marks the second significant takeover in the building supplies industry within the span of a week. Last Thursday, QXO Inc. revealed its intention to purchase Beacon Roofing Supply Inc., valuing the transaction at about $11 billion, including debt.
The U.S. housing market has experienced a downturn since 2022, when mortgage rates began to rise from the lows seen during the pandemic’s peak. Last year, sales of previously owned homes in the U.S. dropped to their lowest levels in nearly three decades. In recent weeks, the average interest rate on a 30-year mortgage in the United States crept up again to 6.67%, as reported by mortgage buyer Freddie Mac on Thursday.
Sam Darkatsh, an analyst at Raymond James, commented in a note to clients that the current unpredictability of the housing market renders Beacon’s acquisition advantageous for its shareholders. Beacon is based in Herndon, Virginia. As part of the James Hardie deal, shareholders of The AZEK Company Inc., headquartered in Chicago, will each receive $26.45 in cash and 1.034 ordinary shares of James Hardie for each AZEK share they hold.
Post-acquisition, James Hardie’s shareholders will possess approximately 74% of the newly combined company, while AZEK shareholders will control 26%. The merger will create a company offering siding, exterior trim, decking, railing, and pergolas, among other building materials. James Hardie’s CEO Aaron Erter remarked that both companies have been successful in generating demand with innovative products and solutions, noting that the consumer journeys for siding and decking often overlap.
Upon completion of the acquisition, James Hardie’s ordinary shares are set to be listed on the New York Stock Exchange. Both companies’ boards have approved the transaction, aiming for it to be finalized in the latter half of the year. The deal is still contingent on the approval of AZEK’s shareholders. News of the acquisition positively impacted AZEK’s stock, which surged by over 14% on Monday.