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UPDATED: PGT entertaining rival bid to Masonite acquisition

According to DWM reports, Florida-based PGT Innovations has received a rival bid from Miter Brands that may scuttle the $3 billion merger deal with Masonite announced Dec. 18. The original Masonite announcement follows…

Masonite International, a leading global designer, manufacturer, marketer and distributor of interior and exterior doors and premium door systems, and PGT Innovations, a designer and manufacturer of patio door and premium window solutions, have 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.

According to the announcement, the addition of PGT Innovations provides Masonite with complementary product offerings in adjacent categories, attractive geographies, expanded routes to market and cross-selling opportunities, enhanced engineering and manufacturing capabilities, as well as a significantly stronger growth and financial profile.

“The acquisition of PGT Innovations accelerates our strategy and is an exciting and transformational step in the nearly 100-year history of Masonite,” said 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,” said Jeffrey T. Jackson, President and CEO of 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.”

Compelling Strategic and Financial Benefits to Drive Shareholder Value

• Creates a premier door and window company with substantial depth and breadth: Masonite and PGT Innovations have extensive 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’ highly complementary products provides significant growth and cross-selling opportunities with whole-home solutions and strengthens Masonite’s customer value proposition in serving the growing indoor/outdoor living trend.
• Transforms Masonite’s scale and capabilities: On a pro forma basis for the last twelve months ended October 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 and, in combination with its enhanced product and innovative offerings, deliver industry-leading growth and returns.
• Significantly accelerates growth profile: By adding attractive and high-growth complementary products and sales channels with meaningful cross-selling potential, the combination will provide an enhanced growth profile for Masonite to expand its customer base as it explores new routes to market for the combined product portfolio. The combined company will have a highly attractive geographic footprint across many high-growth metropolitan areas, including in Texas and Florida. Acquiring PGT Innovations – with its decade long track record of double-digit annual revenue growth – will expand Masonite’s total addressable market and increase its expected future revenue growth by approximately 200 bps.
• Unlocks opportunity for significant synergies: 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.

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.