Beacon Roofing Supply will acquire Allied Building Products from CRH Group for $2.625 billion in cash.

Beacon expects to finance the acquisition with approximately $2.2 billion of debt financing through an upsized ABL revolving credit facility, an upsized term loan B facility, a new unsecured senior note and approximately $500 million of committed convertible preferred equity financing from an entity affiliated with the investment firm Clayton, Dubilier & Rice, which in October 2015 sold Roofing Supply Group to Beacon. The parties currently expect to consummate the transaction on or around January 2, 2018, subject to satisfaction of customary closing conditions.

Citi and Wells Fargo are acting as joint lead arrangers on the debt financing.

According to a related 8-K filing, Beacon entered into a commitment letter with Wells Fargo Bank, Wells Fargo Investment Holdings, Wells Fargo Securities and Citigroup Global Markets. The debt commitment letter provides that the commitment parties have agreed to provide Beacon with the following to support the acquisition:

  • A seven-year senior secured term loan B facility in an aggregate principal amount of up to $970.0 million
  • A senior secured asset-based revolving credit facility in an aggregate principal amount of $1.3 billion
  • A senior unsecured bridge facility in an aggregate principal amount of up to $1.3 billion, which $1.3 billion amount will be reduced by the amount of certain securities offerings consummated on or prior to the closing of the Allied Acquisition in accordance with the terms of the commitment letter

Founded in 1950, Allied is headquartered in East Rutherford, NJ, and distributes products across 208 locations in 31 states. These include exterior products, such as roofing, siding, windows and doors, and interior products, such as wallboard and suspended ceiling systems. The combination of Beacon and Allied will make Beacon one of the largest publicly traded wholesale building materials distributors in North America.

Citi is serving as a financial advisor to Beacon and Sidley Austin is serving as a legal advisor. J.P. Morgan acted as a financial advisor to CRH and Kilpatrick Townsend & Stockton is serving as a legal advisor. Debevoise & Plimpton is acting as counsel to CD&R.