Image By: Simonton Windows Simonton Windows makes vinyl windows and patio doors at three U.S. factories.
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Topics Mergers & Acquisitions, United States, Windows & doors, Pipe/Profile/Tubing
Building materials manufacturer Ply Gem Holdings Inc. will acquire Simonton Windows from Fortune Brands Home & Security in a $130 million deal that lines up with its strategy to grow earnings through targeted acquisitions of complementary product lines.
Columbus, Ohio-based Simonton manufactures vinyl windows and patio doors at three U.S. factories and takes in more than $300 million in sales. Its sales are mostly in the repair-and-remodel segment while Ply Gem’s strength is in new construction.
Ply Gem will operate Simonton Windows as a stand-alone business unit and keep its management team in place after the deal closes, probably in October. The transaction, which is valued at roughly 10 times 2014 earnings before interest, taxes, depreciation and amortization (EBITDA), also includes all assets of SimEx, a vinyl and PVC foam extrusion operation in West Virginia.
Ply Gem’s estimated sales of $750 million put the Cary, N.C.-based company at No. 5 in Plastics News’ most recent ranking of pipe, profile and tubing extruders. Ply Gem is buying Simonton with cash on hand and new debt. Company officials said the acquisition should be credit accretive from anticipated cost savings and competitive advantages that drive sales growth of top-line products.
“The transaction combines two leading low-maintenance, energy-efficient residential window businesses under the Ply Gem umbrella. Both companies will now be able to offer a more comprehensive product portfolio, benefit from an expanded distribution network and have a more efficient national manufacturing platform,” Ply Gem said in an email to Plastics News.
Simonton produces Energy Star-qualified windows and doors and a line of impact resistant products at facilities in California, Illinois and West Virginia, which is a separate plant from the foam operation.
“The addition of Simonton Windows is in full alignment with our strategic growth plan and will better balance the mix of end markets that we serve while strengthening our core capabilities and contributing significantly to revenues in the future,” Ply Gem President and CEO Gary Robinette said in a news release.
Fortune Brands CEO Chris Klein echoed those remarks and called the sale a “natural combination.”
“Together the companies can now offer a more comprehensive product portfolio, benefit from an expanded distribution network and have a more efficient national manufacturing platform,” Klein said in a news release.
He also said the sale of Simonton will allow Fortune Brands to focus more on its Therm-Tru entry door and Fypon trim business and position those product lines to increase operating results in 2015.
Last year, Ply Gem was in acquisition mode to diversify its product lines and increase its presence in Canada. The company bought Calgary, Alberta-based Geinow WinDoor Ltd. for $20.4 million and Ontario-based Mitten Inc., a manufacturer and distributor of vinyl siding and accessories, for $76.8 million.
In addition to vinyl windows, patio doors and siding, Ply Gem produces aluminum siding and accessories, designer accents, cellular PVC trim and moldings, vinyl fencing and railing, stone veneer and gutterware.
Ply Gem’s operating earnings increased to $31.2 million for the second quarter of 2014 compared to $24.2 million for the prior year after adjusting for $23.5 million of initial public offering costs.