Cary, N.C.-based Cornerstone Building Brands Inc., the largest manufacturer of exterior building products in North America, will be acquired by affiliates of Clayton, Dubilier & Rice in an all-cash deal with an enterprise value of about $5.8 billion, including debt assumption.
CD&R, a New York-based private equity firm, currently owns more than 49 percent of the shares of common stock for Cornerstone, which produces vinyl windows, vinyl siding, stone veneer, metal roofing, metal wall systems and metal accessories.
The firm is buying the remaining shares of Cornerstone, which trades publicly as CNR but will become a privately held company when the deal is done. Cornerstone owns the Ply Gem brands of window, door, siding and trim along with a variety of other products.
The acquisition will accelerate the manufacturer's "aspiration" to become a premier source of exterior building products, according to Cornerstone President and CEO Rose Lee.
"We have grown our business and portfolio since 2018 when the company was created, delivering high-quality exterior building products with a strong focus on being a partner of choice for our customers," Lee said in a news release. "CD&R will continue to be an outstanding partner as we advance our operational improvements and innovation-driven growth to create many positive outcomes for our customers and employees."
Cornerstone serves the residential and low-rise non-residential building markets in North America with about 20,000 employees.
Sales for 2021 reached $5.58 billion with a profit of $665.9 million compared to $4.6 billion in 2020 with a loss of $482.8 million, which was due largely to a non-cash, pre-tax goodwill impairment accounting adjustment of $503.2 million.
With $2.28 billion in annual profile sales, Cornerstone is the second largest pipe, profile and tubing producer in North America, according to Plastics News' latest ranking.
The proposed deal means Cornerstone shareholders will receive $24.65 in cash per share, which represents about a 16 percent premium to the closing price of the company's common stock as of March 4 and a 75 percent premium to Feb. 4 — the last trading day prior to speculation in the market regarding a potential transaction.
Cornerstone formed a special committee of independent directors to review proposals from CD&R and make recommendations to the company's board of directors, which then approved the acquisition.
George L. Ball, chairman of the special committee, noted the deal delivers a significant and immediate cash premium to shareholders.
"The ... committee thoroughly reviewed CD&R's proposal, considering the benefits of the transaction against other strategic alternatives available to the company, including continuing as a publicly-traded company," Ball said in the release. "Following this review, the board determined this transaction is the best path forward for Cornerstone Building Brands and its shareholders. This transaction reflects the significant value of our business and leadership position in the building products industry."
J.L. Zrebiec, a partner at CD&R, said the firm has been a supportive long-term investor because Cornerstone delivers value.
"The company has an outstanding team and portfolio of products well-positioned to meet the needs of today's evolving market. We are confident that as a privately held company, with CD&R's operational and strategic support, Cornerstone Building Brands will be even better positioned in its next phase of growth," Zrebiec said.
The transaction is expected to close in the second or third quarter of 2022. The acquisition also is subject to approval by holders of a majority of the shares not owned by CD&R and its affiliates.