Cary, N.C.-based Ply Gem Parent LLC will acquire the hollow-core vinyl window and patio door business of Andersen Corp. for $190 million in a deal that includes four manufacturing plants employing more than 4,000 people.
The facilities produce the Silver Line and Andersen Craftsman brands and employ about a third of the 115-year-old Bayport, Minn.-based company's global workforce of 12,000 people.
"This divestiture is part of Andersen's broader strategy to sharpen our focus on our Andersen, Renewal by Andersen and specialty brands, continue to make the significant investments required to support our fast-growing, proprietary, Fibrex engineered composite products, and deliver exceptional value to our customers for years to come," Andersen Corp. Chairman and CEO Jay Lund said in a news release.
"In addition, we believe the Silver Line and American Craftsman brands and the talented employees who have built these brands will have continued growth opportunities under Ply Gem's stewardship."
Ply Gem's acquisition of the four Silver Line manufacturing plants and related distribution and support services for $190 million represents a multiple of 10 times Silver Line's trailing 12 months of earnings before interest, taxes, depreciation and amortization through the second quarter of 2018.
However, given the effect of synergies — half from procurement and the balance from manufacturing logistics and administration — over the next several years, the multiple comes in at 4.4 times the purchase price, making the deal "leverage neutral," said Donald Riley, president and CEO of NCI Building Systems Inc., which is buying Ply Gem, in an Aug. 29 quarterly conference call.
The Silver Line vinyl window and patio door division posted sales of more than $440 million in 2017.
The acquisition strengthens the portfolio of Ply Gem, which says it is the No.1 seller of vinyl siding and vinyl and aluminum windows, with two respected brands that have been around more than 60 years. The transaction is expected to balance the portfolio across both the new construction and repair and remodel markets; strengthen the residential windows platform with manufacturing scale and distribution advantages; and create opportunities to improve customer service and profits.
"This transaction is in full alignment with our strategic growth plan," Ply Gem's Chairman and CEO Gary Robinette said in a news release. "The addition of the Silver Line business will better balance the mix of end markets that we serve, strengthen our core capabilities and contribute significantly to revenues and earnings. We are confident this will help us achieve synergies and competitive advantages that drive top line sales and enhanced customer value."
Ply Gem will fund the acquisition through a combination of cash on hand and incremental borrowings. With sales of $1.9 billion, Ply Gem is the No. 2 pipe, profile and tubing extruder in North America, according to Plastics News rankings. The company has 11,600 employees at 35 sites that manufacture a variety of exterior building products, including designer accents, cellular PVC trim and mouldings, vinyl fencing and railing, stone veneer and gutterware for the U.S. and Canada.
Andersen Corp.'s subsidiary, Silver Line Building Products LLC, is ranked 24th by Plastics News with estimated vinyl window and door sales of $190 million.
Andersen officials say their company will focus on its namesake and specialty brands, which have seen "unprecedented growth" in recent years. The privately held company and its subsidiaries also manufacture windows and doors under the Emco, Weiland, MQ and Heritage brands at sites in North America and Europe.
The deal is expected to close early in the fourth quarter of 2018 pending regulatory approval.
Ply Gem's deal with NCI also is set to close at the end of the year in all-stock deal described as a "transformational combination" that will create the leading exterior building products company. The combined company is expected to generate $4.5 billion of sales for the 2018 calendar year.