James Hardie Industries (JHX) Business Combination summary

Deal rationale and strategic fit

• Creates a leading platform in exterior and outdoor living building products by combining two fast-growing, complementary companies, expanding the total addressable market to $23 billion in North America and doubling exposure to the outdoor living category.

• Accelerates material conversion-led growth and provides customers with a comprehensive suite of leading exterior brands, leveraging both brands' strengths and innovation.

• Both companies share a strong culture, focus on innovation, sustainability, and a contractor-driven approach, ensuring alignment and operational synergy.

• Expands into the repair & remodel segment, leveraging strong U.S. housing fundamentals and enhancing the value proposition for customers and contractors.

• The merger is expected to accelerate revenue growth trajectory and enhance market positioning as a leader in home exterior categories.

Financial terms and conditions

• James Hardie will acquire AZEK for $8.75 billion, including AZEK's net debt of $386 million as of December 31, 2024; AZEK shareholders will receive $26.45 in cash and 1.0340 James Hardie shares per AZEK share, totaling $56.88 per share and a 26% premium to AZEK’s 30-day VWAP.

• Combined company would have generated $5.9 billion in net sales and over $1.8 billion in adjusted EBITDA for 2024, with a 31% EBITDA margin (pro forma, including synergies).

• Post-transaction, James Hardie and AZEK shareholders will own approximately 74% and 26% of the combined company, respectively.

• The cash portion will be funded through fully committed debt financing, with a bridge facility led by Bank of America and Jefferies LLC.

• Up to $500 million in share repurchases planned within 12 months after closing, with a target leverage ratio below 2.0x by the end of the second full fiscal year post-closing.

Synergies and expected cost savings

• At least $350 million in total annual adjusted EBITDA synergies expected within five years post-closing, including at least $125 million in cost synergies and $225 million in commercial synergies.

• Cost synergies from procurement, R&D, overlapping headquarters, and administrative efficiencies; commercial synergies from cross-selling, leveraging contractor networks, and material conversion.

• Full run-rate cost synergies expected by year 3, commercial synergies by year 5 post-close, with total synergy realization by fiscal 2028.

• $350 million cumulative cost to achieve synergies, spread over five years from 2026 to 2030.

• The combined company targets robust annual free cash flow exceeding $1 billion once synergies are achieved.