Owens Corning Boosts Position With Masonite’s Acquisition

Owens Corning, a major player in the worldwide construction materials sector, has made a significant move by purchasing Masonite International Corporation, a global innovator in interior and exterior doors and door systems. This bold acquisition marks a 38% premium to Masonite’s closing share price as of Feb. 8, 2024, and a 46% premium to its 20-day volume-weighted average price. The deal is worth around $3.9 billion, implying an 8.6x 2023E adjusted EBITDA or 6.8x when considering synergies of $125 million.

By acquiring Masonite, Owens Corning furthers its stronghold in residential construction materials. The merger will extend its range of high-quality products and brands. The company expects to capitalize on Masonite’s successful history of innovation and brand quality to further its expansion into the doors market.

Masonite, established in 1925, specializes in designing, manufacturing, and selling doors and door systems. With its vertically integrated manufacturing model, the company caters to both repair and remodel and new construction demands. It operates 64 manufacturing and distribution facilities, mostly in North America, and employs over 10,000 people worldwide.

Owens Corning is optimistic about this agreement, viewing it as a chance for a scalable new growth platform. The company believes that the integration of Masonite’s market-leading doors business will prove beneficial in accelerating its long-term growth strategy. This strategic move will also enhance Owens Corning’s financial profile, with the estimated revenues and earnings reaching approximately $12.6 billion and an adjusted EBITDA of $2.9 billion on a pro forma basis.

One of the many benefits of this acquisition is the expansion of Owens Corning’s leadership position in branded residential building products. The inclusion of Masonite’s product line will complement and advance Owens Corning’s strategy for residential applications. Moreover, the merger will increase Owens Corning’s total addressable market by $27 billion, creating a platform for new growth opportunities in other product areas.

The acquisition will allow Owens Corning to free up more cash, which will support its capital allocation strategy. After accounting for the financing of the transaction, the company expects net debt-to-EBITDA to fall within its target range of 2-3x, further decreasing to 2.0x by the end of 2024.

The merger decision has received unanimous approval from the boards of directors of both companies. The deal is expected to close in mid-2024, subject to Masonite shareholder approval, regulatory approvals, and other standard closing conditions.

In a separate development, Owens Corning has also indicated that it will initiate a strategic review of its glass reinforcements business, a part of the company’s Composites segment. Post-acquisition, Masonite will continue to operate as a distinct segment, maintaining its brand and presence in Tampa, Florida.