NCI Building Systems, Inc. a manufacturer of exterior building products for commercial construction, and Ply Gem Parent, LLC, a manufacturer of exterior building products for residential construction, announced that they have signed a definitive agreement under which the two companies will combine in a stock-for-stock merger. The combined company will have a pro forma enterprise value of $5.5 billion and an implied equity value of $2.6 billion, based on NCI’s closing share price on July 17, 2018.
NCI Chairman James S. Metcalf, who will lead the integration of the two companies and serve as Chairman and CEO of the Company, said, “This transformational combination creates the leading exterior building products company with multiple avenues for further growth. Both companies are experiencing sustained momentum driven by meaningful cost savings, and the greater scale and diversification of the combined company support organic growth, margin expansion and longer-term M&A opportunities. With a greater ability to attract and retain top talent in all fields, our combined company will continue to innovate in the exterior building products space – far beyond what either of us could do alone.”
The transaction will create a market-leading North American exterior building products platform providing new construction and repair & remodel solutions for commercial and residential applications. As a larger, vertically-integrated manufacturer with enhanced growth opportunities through adjacent products, the combined company seeks to become a one-stop solution for exterior building envelope needs.
Ply Gem Chairman and CEO Gary E. Robinette, who will continue to serve in this role until close, added, “I am grateful and honored to have had the opportunity to lead Ply Gem over the past 12 years and I am proud of our team’s accomplishments during the past decade of successes and challenges. The joining of these two market-leading exterior building products companies creates a platform for growth, enhanced innovation and cost improvements, while serving all channels of the construction markets. I am excited for the associates and customers of the combined company and the next evolution of this best-in-class provider of exterior building envelope solutions.”
Under the terms of the agreement, NCI will issue 58.7 million shares to Ply Gem shareholders. Upon the close of the transaction, NCI shareholders will own 53% of the Company’s common equity, with Ply Gem shareholders owning 47%. The transaction is generally expected to be tax-free to the Ply Gem owners for U.S. federal income tax purposes.
On a combined basis for calendar year 2018, the Company is expected to generate revenue of approximately $4.5 billion and Pro Forma Adjusted EBITDA of $660 million – $680 million, including run-rate synergies and cost savings. The Company expects that, after three years following close, cost reduction initiatives and merger-related synergies will yield over $150 million in annual cost savings.