James Hardie Secures $3.5 Billion Credit for Major AZEK Acquisition

Published 18 hours agoJHX

James Hardie Secures $3.5 Billion Credit for Major AZEK Acquisition

James Hardie Industries has entered into a high-profile financial undertaking by securing a $3.5 billion credit facility to support its acquisition of The AZEK Company Inc. This acquisition is valued at $8.75 billion and involves a combination of cash and stock transactions. As part of this deal, AZEK, a top manufacturer of high-performance outdoor living products, will join James Hardie's portfolio. Reuters reported that this move signals a strategic expansion into the growing U.S. outdoor living products market.

To finance the cash portion of the acquisition, James Hardie has arranged debt financing, facilitated by a fully committed bridge financing facility led by Bank of America and Jefferies LLC. In the transaction, AZEK shareholders are to receive $26.45 in cash and 1.0340 ordinary shares of James Hardie per AZEK share. This values each AZEK share at $56.88, a 26% premium over AZEK's previous 30-day average share price. Following the completion, current James Hardie shareholders will hold about 74% of the merged company.

This acquisition is strategically designed to enhance James Hardie's product offerings by integrating AZEK's outdoor living products, which fits well with James Hardie's existing focus on house exteriors. The combined company is poised to capture a more significant share of the North American market, estimated to be worth $23 billion. Furthermore, the deal is expected to generate $350 million in additional annual adjusted EBITDA from various synergies, including cost savings and revenue boosts. Despite these strategic advantages, the news of the acquisition led to a more than 15% drop in James Hardie's shares, indicating investor apprehension over the financial burden of the acquisition costs, as reported by the Financial Times.

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