Construction distribution giant sells interiors business for $850M


Beacon, the largest publicly traded distributor of roofing
materials and building products in the United States, is selling its interior
products business to affiliates of American Securities LLC, a private equity
firm, for $850 million.

The business consists of 81 branch locations where Beacon
distributes construction products including wallboard, acoustical ceilings,
steel framing and insulation to both residential and commercial contractors.

The transaction expected to close during Beacon’s fiscal
2021 second quarter. The company intends to use the anticipated after-tax
proceeds of approximately $750 million from this divestiture to reduce net leverage
and strengthen its balance sheet.

“Today’s announcement represents an important strategic
decision for Beacon,” said Julian Francis, Beacon’s President and Chief
Executive Officer. “After undertaking a thorough analysis, we determined that a
divestiture of Interior Products is in the best interests of our shareholders,
as well as our Interiors customers and associates. This transaction will
substantially accelerate our efforts to improve our balance sheet, reduce net
leverage and provide the financial flexibility to pursue strategic growth
initiatives in our core exteriors business to drive shareholder value. We are
excited about our start to fiscal 2021, especially the growth we are seeing in
residential roofing sales. The Interior Products divestiture will allow us to
focus entirely on driving growth and profitability in our core exteriors

Kevin Penn, a Managing Director of American Securities,
stated, “We are excited to have reached an agreement to acquire Beacon’s
Interior Products business. Following the November announcement of our
take-private of Foundation Building Materials (NYSE: FBM), this follow-on
transaction represents an exciting opportunity to combine two companies that
have made customer service their highest priority. The combined company’s
expanded geographic presence across the U.S. and Canada will enhance its
partnership with customers, vendors, and team members. We look forward to
closing the transaction early next year and integrating these two great

During fiscal 2020, Interior Products generated $1.03
billion in net sales, a net loss of $11 million, and Adjusted EBITDA of $73
million. The Company intends to update its fiscal 2021 outlook, reflecting the
divestiture of Interior Products, as part of its fiscal 2021 first quarter
earnings release.

Goldman Sachs served as sole financial advisor to Beacon,
and Sidley Austin LLP and Potter Anderson & Corroon LLP acted as legal
advisors to Beacon on the transaction. Weil, Gotshal & Manges LLP served as
legal advisor to American Securities on the transaction.

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