Masonite to acquire PGT Innovations in $3B transaction

Masonite (DOOR) and PGT Innovations (PGTI), a designer and manufacturer of patio door and premium window solutions, and recognized leader in technically advanced products for impact rated glass applications, announced a definitive agreement under which Masonite will acquire PGT Innovations for a combination of cash and Masonite shares with a total transaction value of $3B. Under the terms of the agreement, PGT Innovations shareholders will receive $41.00 per each PGT Innovations share they own, comprised of $33.50 in cash and $7.50 in common shares of Masonite. The per share consideration represents a premium of approximately 24% to PGT Innovations’ 30-day volume weighted average share price. Upon completion of the transaction, Masonite shareholders will own approximately 84% of the combined company, with PGT Innovations shareholders owning approximately 16%. The acquisition is expected to deliver earnings per share, or EPS, accretion and significant synergies with minimal investment required to integrate the two businesses. Howard Heckes will continue to serve as CEO of Masonite. At the closing, Jeff Jackson, PGT Innovations CEO, and one additional PGT Innovations director will join the Masonite board of directors. The boards of directors of both Masonite and PGT Innovations have each unanimously approved the transaction. The transaction is currently anticipated to close in the middle of 2024 subject to approval by the PGT Innovations shareholders, as well as the receipt of required regulatory approvals, and satisfaction of other customary closing conditions. Masonite intends to fund the cash portion of the merger consideration with a combination of cash on hand, borrowings under existing credit facilities and the proceeds from new debt and/or equity financing. Masonite has received $1.8B in senior secured term loan commitments and $980 million in bridge loan commitments from Jefferies Finance and Sumitomo Mitsui Banking Corporation in connection with the transaction. At closing, Masonite estimates that its pro forma net leverage will be approximately 4.1x. Masonite intends to reduce its leverage to below 3.0x in approximately two years post-close.