Australian building products company James Hardie Industries is buying the U.S. outdoor products maker AZEK in a cash-and-stock deal valued at approximately $8.75 billion, including $386 million in debt.
It's the second major acquisition in the building supplies sector in less than a week, with QXO Inc. announcing on Thursday that it was buying Beacon Roofing Supply Inc. in a deal worth about $11 billion, including debt.
The U.S. housing market has been in a slump since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes fell last year to the lowest level in nearly 30 years.
The average rate on a 30-year mortgage in the U.S. rose slightly for the second week in a row to 6.67%, mortgage buyer Freddie Mac said Thursday.
Raymond James analyst Sam Darkatsh said in a client note that the uncertainty in the housing market makes Beacon's acquisition a positive for its shareholders. Beacon is based in Herndon, Virginia.
Under the James Hardie deal, shareholders of The AZEK Company Inc. will receive $26.45 in cash and 1.034 ordinary shares of James Hardie for each share of AZEK stock that they own. AZEK is based in Chicago.
James Hardie shareholders will own about 74% of the combined company, with AZEK stockholders owning 26%.
The combined company will sell siding, exterior trim, decking, railing and pergolas, among other building goods.
“The consumer journeys for siding and decking often overlap and both companies have excelled at demand creation for the homeowner and innovative products and solutions for the contractor,” James Hardie CEO Aaron Erter said in a statement.
James Hardie's ordinary shares will list on the New York Stock Exchange once the deal closes.
The boards of both companies have unanimously approved the transaction, which is currently targeted to close in the second half of the year. The deal still needs AZEK shareholder approval.
AZEK's stock soared more than 14% Monday.
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