Mergers

Combined: 2018 Acquisitions Cue in on Products

After a brief slowdown in 2017, the door and window industry churns yet again with mergers and acquisitions—some of which display changes to product and material niches among manufacturers and investors. On the heels of a Ply Gem and NCI merger announcement (to the tune of $2.6 B), Andersen Corp. announced in August that it’s signing over two of its vinyl window lines to Ply Gem, in order to focus on products made of wood-plastic composites (WPC, which it markets as Fibrex). Meanwhile, two other transactions cue separate companies and investors on other material changes and a market for doors and windows that merges indoor and outdoor environments.

On August 28, Andersen Corp. announced it will sign over Silver Line and American Craftsman, two vinyl window and patio door brands, to Ply Gem, in a deal that’s slated to close early in the 2018 fourth quarter. The shift, according to Andersen officials, aims more of the company’s resources at products made of WPC. At the same time, a separate deal struck between BDG & Partners, a privately held Canadian fund based in Montreal, and Quebec-based P.H. Tech, a PVC door and window designer and extruder, sends BDG in the direction of vinyl. (To date, BDG’s investitures focus on products ranging from wood, foods and glass bottles to garments, with the nearest matches to P.H. Tech including plastic tubes and access doors for applications like plumbing.) Meanwhile, two additional transactions cue more on product motif and distribution territory, including PGT Innovations’ acquisition of Western Window Systems and Panoramic Doors’ recapitalization via Tower Arch Capital.

In a $360 M deal announced in July, PGT announced it will acquire Western Window Systems in a merger that will expand the company’s reach through physical distribution and branding across a 40-state, Western-U.S. territory (see What’s News, page 16, in DWM’s August-September 2018 edition). But there are also some portfolio differences worth noting in that deal, which seem to echo the latest sentiment at Andersen. PGT’s president and CEO, Jeff Jackson, tags the transaction for creating a conglomerate within the “premium window and door space,” while Andersen cuts ties with two of its vinyl lines in order to focus on Renewal by Andersen, a more premium line of products.

Another common thread includes the fact that, among their reasons for investiture, Tower partners cited Panoramic’s focus on products that “combine indoor and outdoor living spaces.” In a similar mashup, Western’s products primarily include a non-traditional approach to doors and windows aimed at opening up indoor-outdoor design concepts, while its acquirer, PGT, is noted primarily for impact-resistance.

To be clear: There are large financial stakes being realigned in each transaction. Through its deal with Ply Gem, Andersen divests four manufacturing plants and associated distribution and support services to the tune of $190 M, which the company’s CEO says it will focus on WPC and other specialty brand products. PGT’s $360 M investment, company officials say, will net a backlog of demand on Western Window’s side throughout the first six months of 2018, with an expected outcome of $706 M to $732 M total for 2018. But, in addition to those financial transactions, with the related shifts in product focus, some investors and manufacturers clearly are wagering on demands for premium products, including those that merge indoor and outdoor spaces.

Associations

IGMA and AAMA Discuss Combination

The Insulating Glass Manufacturers Alliance (IGMA) discussed the potential creation of a unified organization amid its summer conference—one that would combine IGMA with the American Architectural Manufacturers Association (AAMA). The board of directors of both organizations announced the discussions in June.

During the conference, IGMA executive director, Margaret Webb, and AAMA executive vice president, Janice Yglesias, outlined the potential combination, while asking IGMA members for questions and comments. According to those discussions, a combined organization would have a new name and both a Canadian and American focus. The AAMA, IGMA and IGMAC branding would remain on existing documents.

“Within the structure of the new combined organization, our strategy will emphasize maintaining a strong presence in both the U.S. and Canada with an appropriate balance to support all members across North America,” says IGMA board chair Nathalie Thibault. “We anticipate improved efficiency and time savings through potential sharing of combined events and networking opportunities as well as expanded staff support.”

Currently, the joint exploratory team is considering dividing the organization into three product groups: architectural (APG), residential (RPG) and glass (GPG). The GPG would encompass existing IGMA committees. IGMA members would have the option to join only the GPG.

The goal is to merge the best practices from each organization to manage technical documents, while any new documents created would be branded with the combined name.

The board would include four officers, three APG members, three RPG members, three GPG members and two at-large members. The exploratory team is considering maintaining AAMA’s three conferences a year rather than IGMA’s two conferences, one of which would be held in Canada.

The joint IGMA/AAMA Summer Conference in 2019 will be a trial run of the proposed unified organization, after which members will be able to vote on the combination. According to IGMA’s bylaws, however, only members in the manufacturer membership category can vote on the change. Manufacturers and suppliers in AAMA can vote on the issue.

NFRC Educates Chinese Government

Representatives from the National Fenestration Rating Council (NFRC) traveled recently to Beijing, where they educated the Chinese government on the development of a national system for testing, rating and certifying building products for energy efficiency—including windows. A resulting two-day meeting arose from a joint initiative led by the U.S. Department of Energy (DOE) in collaboration with China’s National Development and Reform Commission (NDRC), seeking to implement a national, uniform certification system by 2020, increasing the supply of energy efficient products available to China’s building market.

Expansions

Andersen to Build in Arizona

Andersen Corp. announced in September that it plans to build a new, 500,000-square-foot manufacturing and distribution facility in Goodyear, Ariz., where it will initially invest more than $105 M, but as much as $200 M including future expansions. Company officials report that the facility will introduce more than 415 jobs to the area, while providing additional support for products made of wood-plastic composite (WPC, which it markets under the name Fibrex), including its 100 Series.

Phase one of construction is expected to begin in early 2019, with operations commencing by the middle of 2020.

“This new manufacturing campus is an exciting opportunity for us to increase manufacturing and distribution capacity for our fast-growing Fibrex [WPC] products and expand our presence in the western United States where we are experiencing significant growth,” says Andersen Corp. chairman and CEO Jay Lund. “We are grateful for the support of Arizona Governor Doug Ducey, the city of Goodyear, Maricopa County and Greater Phoenix Economic Council and we look forward to working closely with these partners and tapping into a robust local workforce to build a world-class manufacturing operation in the region.”

The news follows an August announcement by Andersen regarding the divestiture of its Silver Line and American Craftsman brands to Ply Gem for $190 M (see article on p14).

The new facility will be owned and operated by subsidiary Andersen Regional Manufacturing Inc. An exact location hasn’t been disclosed. Company officials say they’re working with the state of Arizona and the city of Goodyear regarding a proposed location.

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