Owens Corning, a provider of building and construction materials, and Masonite, a provider of interior and exterior doors and door systems, entered into a definitive agreement under which Owens Corning will acquire all outstanding shares of Masonite for $133.00 per share in cash, representing an approximate 38% premium to Masonite’s closing share price on Feb. 8 and an approximate 46% premium to Masonite’s 20-day volume-weighted average price. The implied transaction value is approximately $3.9 billion, implying a purchase multiple of approximately 8.6x 2023 adjusted EBITDA² or 6.8x when including synergies of $125 million. Morgan Stanley Senior Funding is providing $3 billion in committed debt financing to support the transaction.

Founded in 1925, Masonite designs, manufactures and markets doors and door systems, with a vertically integrated manufacturing model serving both repair and remodel and new construction demand. Masonite operates 64 manufacturing and distribution facilities, primarily in North America, and has more than 10,000 employees globally.

“We are excited by this opportunity to add a scalable new growth platform for our company,” Brian Chambers, board chair and CEO of Owens Corning, said. “Masonite is a market leader that complements our existing residential interior and exterior product offering and has consistently demonstrated top-line growth and margin expansion. The combination of our commercial, operational and innovation capabilities allows us to accelerate our long-term enterprise growth strategy with a clear line of sight to meaningful synergies and increased cash flow generation. We look forward to welcoming the talented Masonite team to Owens Corning and working with them to deliver enhanced value to customers and shareholders.”

“Our world-class team is transforming the door industry with differentiated solutions for the home,” Howard Heckes, president and CEO of Masonite, said. “The combination with Owens Corning enables the acceleration of our ‘Doors That Do More’ strategy while delivering immediate and substantial value to our shareholders. This agreement brings together two storied companies with a common focus on innovation and making life better at home for the people who use our products every day. As we begin our next chapter after nearly 100 years in business, I am looking forward to Masonite joining the Owens Corning team.”

The transaction will be implemented by way of a statutory plan of arrangement pursuant to the Business Corporations Act in British Columbia. The boards of directors of both companies unanimously approved the transaction. The transaction is expected to close in mid-2024, subject to Masonite shareholder approval, regulatory approvals and other customary closing conditions including the issuance of interim and final orders by the Supreme Court of British Columbia approving the plan of arrangement.

Following the closing, Masonite will operate as a reportable segment and will maintain Masonite’s brands and a presence in Tampa, FL.

Morgan Stanley is acting as lead financial advisor to Owens Corning, while Lazard Freres provided additional advice to the Owens Corning board of directors. Davis Polk & Wardwell is acting as Owens Corning’s legal counsel and Stikeman Elliott LLP is acting as Owens Corning’s Canadian legal counsel.

Goldman Sachs is acting as lead financial advisor and Jefferies also is acting as financial advisor to Masonite. Wachtell, Lipton, Rosen & Katz is acting as Masonite’s legal counsel, and Cassels Brock & Blackwell is acting as Masonite’s Canadian legal counsel.