The Building Products Segment Looks Attractive to InvestorsJune 25th, 2015 by Casey Flores
The building products segment is seeing merger and acquisition activity accelerate on the heels of improving market fundamentals, according to an industry report released by Brown Gibbons Lang & Company (BGL). Growing investor appetite is broad-based, spanning both residential and commercial construction end markets, the release reads.
According to BGL, the door and window industry is among the sectors “seeing a healthy uptick” as participants seek consolidation opportunities to expand manufacturing footprints and capabilities, broaden product portfolios and enhance margins. Several acquisitions involving corporate and private equity acquirers have been announced during the past 12 months, which is “indicative of an active deal market and likely harbingers of continued consolidation.”
The following are BGL’s takes on the major acquisitions that took place this year:
- Ply Gem Holdings’ acquisition of Simonton Windows from Fortune Brands Home & Security broadens the company’s national manufacturing platform and establishes a stronger position in the repair and remodeling market. The deal aligns with Ply Gem’s strategy of acquisitive growth, following the 2013 acquisition of Gienow which solidified the leading market position in Canada.
- PGT’s acquisition of CGI Windows and Doors marks the largest acquisition in the company’s 35-year history. The purchase of the regionally-focused maker of impact resistant windows and doors underscores a bullish outlook on a sustained recovery of the Florida housing market.
Both deals involved established brands and were transacted at full multiples, which the report says shows growing investor confidence in continued economic growth and a strengthening recovery in the construction market.
Private equity is adding platforms in the space as well, with funding coming from Altus Capital Partners (GED Integrated Solutions), Nautic Partners (Custom Window Systems) and Audax Group (Chase Doors).
BGL publishes periodic research reports on building products and construction materials. The building products report can be downloaded here.