Masonite to Acquire PGT Innovations in $3 Billion Deal

Masonite International Corp. and PGT Innovations Inc. today 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 $3 billion.

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 of PGT Innovations accelerates our strategy and is an exciting and transformational step in the nearly 100-year history of Masonite,” says Howard Heckes, president and CEO of Masonite. “The combined business will be well positioned to provide homeowners with differentiated solutions across both the interior and exterior openings of the home, while significantly expanding our geographic presence and growth opportunities. The PGT Innovations team shares our commitment to innovation and delivering premium products and is tightly aligned to the three strategic pillars that guide Masonite: delivering reliable supply, driving product leadership and winning the sale. I look forward to welcoming the talented PGT Innovations employees to Masonite and unlocking the many opportunities this combination presents to deliver compelling long-term value to our customers, employees, partners and shareholders.”

“Today’s announcement is a significant milestone for PGT Innovations, and a testament to the talent and dedication of our team members around the country,” says Jeffrey T. Jackson, president and CEO, PGT Innovations. “This transaction will provide significant near-term value to PGT Innovations’ shareholders, while also enabling them to participate in the long-term upside opportunity of the combined company. Over the past few years, PGT Innovations has successfully advanced our strategic priorities: expanding our brands, supporting trends shaping the industry, scaling our business and investing in profitable growth. We have a strong foundation, including our indoor-outdoor portfolio, from which to contribute to Masonite, and look forward to continuing to deliver operational excellence and product innovation for customers as part of the Masonite team.”

This acquisition announcement comes after PGT Innovations rejected two bids from Miter Brands, one for $1.9 billion in October and a recent bid for $2.2 billion.

Leadership and Governance

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.

Strategic and Financial Benefits 

A press release noted the following benefits of the acquisition:

• Masonite and PGT Innovations have product expertise across all of the major openings in the home including interior doors, exterior doors, hinged and sliding patio doors, non-impact and impact-resistant windows and garage doors. Bringing together the companies’ complementary products provides growth and cross-selling opportunities with whole-home solutions, including indoor/outdoor living. 
• On a pro forma basis for the last 12 months ended Oct. 1, 2023, the combined company had a financial profile with over $4 billion in revenue, approximately $700 million of adjusted EBITDA*, and over $400 million of free cash flow*, without giving effect to expected synergies. Masonite’s expanded capabilities as a result of the transaction are anticipated to drive significant operating efficiencies.
• By adding high-growth complementary products and sales channels with cross-selling potential, the combination will provide an enhanced growth profile for Masonite to expand its customer base. The combined company will have a geographic footprint across many high-growth metropolitan areas, including in Texas and Florida. Acquiring PGT Innovations will expand Masonite’s total addressable market and increase its expected future revenue growth by approximately 200 bps.
• Masonite expects to realize approximately $100 million in annual synergies phased in over the next several years following the close of the transaction. These synergies represent a combination of cost-savings opportunities such as efficiencies in corporate overhead and public company costs, raw material and sourcing opportunities, and manufacturing network cost optimization, as well as incremental sales growth opportunities such as cross-selling complementary product offerings to an expanded customer base.
• The anticipated combination of accelerated growth, significant synergies and rapid de-leveraging following completion of the transaction is expected to drive meaningful future earnings growth for Masonite. The transaction is expected to be accretive to Masonite’s EPS in the first full year of ownership and accelerate thereafter with the realization of synergies. Masonite intends to utilize the strength of the combined company’s cash flows and enhanced margin profile to reduce its leverage to below 3.0x in approximately two years post-close.

Terms, Financing and Approvals

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.

Advisors

Jefferies LLC is serving as exclusive financial advisor to Masonite. Wachtell, Lipton, Rosen & Katz is serving as legal counsel and Simpson Thacher & Bartlett LLP is serving as financing counsel to Masonite. Evercore LLC is serving as exclusive financial advisor to PGT Innovations, and Davis Polk & Wardwell LLP is serving as its legal counsel.