NCI Building Systems, Ply Gem Parent to combine in stock-for-stock merger
NCI Building Systems and Ply Gem Parent, LLC, a manufacturer of exterior building products for residential construction, announced that they have signed a definitive agreement under which the two companies will combine in a stock-for-stock merger. The combined company will have a pro forma enterprise value of $5.5B and an implied equity value of $2.6B, based on NCI's closing share price on July 17, 2018. Under the terms of the agreement, NCI will issue 58.7 million shares to Ply Gem shareholders. Upon the close of the transaction, NCI shareholders will own 53% of the Company's common equity, with Ply Gem shareholders owning 47%. The transaction is generally expected to be tax-free to the Ply Gem owners for U.S. federal income tax purposes. On a combined basis for calendar year 2018, the company is expected to generate revenue of approximately $4.5B and Pro Forma Adjusted EBITDA of $660M-$680M, including run-rate synergies and cost savings. The company expects that, after three years following close, cost reduction initiatives and merger-related synergies will yield over $150M in annual cost savings. Clearly scoped standalone cost reduction initiatives are already well underway at both NCI and Ply Gem. Combination-specific synergies include manufacturing efficiencies and procurement and general & administrative savings. The transaction is expected to be immediately accretive to adjusted cash earnings per share and free cash flow. The transaction has been unanimously approved by a special committee of independent directors formed by NCI's Board of Directors and by NCI's full Board. The transaction is expected to close in the fourth calendar quarter of 2018, subject to approval by NCI shareholders and customary regulatory approvals.