James Hardie and The AZEK Company have entered a definitive agreement to combine operations. Under the agreement, James Hardie will acquire AZEK for a combination of cash and James Hardie shares with a transaction value of $8.75 billion.
The combination of the two companies will create a leading exterior and outdoor living products platform. The companies believe that by bringing together highly complementary products that span siding, exterior trim, decking, railing, and pergolas, the combined brand will offer a comprehensive and innovative material solution to homeowners, customers, and contractors.
"Both Hardie and AZEK have excellent brands in their portfolio, with TimberTech and Hardie Board both rating strongly in Zonda Brand Power ratings,” said Todd Tomalak, principal, advisory of building products for Zonda. “That said, they touched very different parts of the housing improvement market, with AZEK typically installed on newer homes than Hardie remodels. We think the opportunity is in further penetration of ‘secondary’ categories that both companies sold but had less domination in.”
Why It Matters
The combined James Hardie-AZEK operation will increase its total addressable market in North America to $23 billion. Together, the companies will provide a full-wrap and complementary solution for the exterior of the home and allow Hardie “to deliver significant brands to all of its partners throughout the customer value chain.” The merger comes on the heels of QXO’s entry into the building materials industry with its acquisition of roofing distributor Beacon.
The companies said the addition of AZEK—which has averaged more than 15% net sales growth in its residential business segment over the last seven years—will “materially enhance James Hardie’s top-line growth trajectory." As a result of the combination, James Hardie projects its annual net sales will accelerate by more than 250 basis points.
James Hardie CEO Aaron Erter will serve as the CEO and James Hardie chief financial officer Rachel Wilson will serve as CFO of the combined company. Upon the closing of the translation, Howard Heckes, Gary Hendrickson, and Jesse Singh will join James Hardie’s board of directors.
What They’re Saying
“This combination with AZEK is an extraordinary opportunity to accelerate our growth strategy, deliver enhanced and differentiated solutions to our customers and drive shareholder value,” said Erter. “Together, we will be well positioned to drive sustained above market growth as a leader across attractive categories for the exterior of the home. 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.”
“Together with James Hardie, we are delivering value to AZEK shareholders and providing them meaningful participation in the long-term secular and financial growth opportunities created by the combined company,” says Singh, CEO of AZEK. “ We are bringing together two customer-centric organizations with a shared commitment to innovation and building a better, more sustainable and resilient future, and we are excited about the opportunities ahead.”
