Exterior products manufacturer Ply Gym Parent and NCI Buildings Systems, a manufacturer of exterior building products for commercial construction, have signed an agreement under which the companies will combine in a stock-for-stock merger. In a July 17 press release, the companies announced the combined company will have an enterprise value of $5.5 billion and an implied equity value of $2.6 billion.
NCI bills itself as one of North America’s largest integrated manufacturers of metal products, selling metal wall and roof systems, insulated metal panels, roll-up doors, trim, and accessories in the commercial construction industry. Ply Gem is known mainly for its residential construction products.
The transaction will create a North American exterior building products platform providing new construction and repair and remodel solutions for commercial and residential applications. The combined company will aim to serve customers with a broader product portfolio across multiple end markets.
The merger is the first major move by private equity firm Clayton Dublier & Rice (CD&R) since it acquired Ply Gem and Atrium Windows & Doors in January, combining the two building materials companies. Funds managed by CD&R will own just under 50% of the combined company's common equity while Golden Gate Capital, a significant shareholder of Ply Gem, will own 16% of the combined company's common equity.
NCI will issue 58.7 million shares to Ply Gem shareholders and upon the close of the transaction Ply Gem shareholders will own 47% of the combined company’s common equity. The combined company is anticipated to generate revenue of approximately $4.5 billion. The companies anticipate three years after the close of the transaction, cost reduction initiatives will yield over $150 million in annual cost savings.
The companies announced each entity will preserve its existing brands but will operate under a name to be determined headquartered in Cary, N.C. The transaction is expected to close in the fourth quarter of 2018, subject to approval by NCI shareholders and customary regulatory approvals.
“The joining of these two market-leading exterior building products companies creates a platform for growth, enhanced innovation and cost improvements, while serving all channels of the construction markets. I am excited for the associates and customers of the combined company and the next evolution of this best-in-class provider of exterior building envelope solutions.” Ply Gem Chairman and CEO Gary Robinette said in the press release.
James Metcalf, the current Chairman of NCI, will become Chairman and CEO of the combined company. Donald Riley, the current CEO of NCI, will serve as the CEO of the combined company’s NCI division while Robinette will serve as the Chairman Emeritus and Special Advisor to the combine company after the transaction closes.
