DBT Bureau
Pune, 24 March 2025
James Hardie Industries plc, a leader in providing high-performance, low-maintenance building products and solutions, and The AZEK Company Inc., a leading manufacturer of high-performance, low-maintenance and environmentally sustainable outdoor living products, announced entry into a definitive agreement under which James Hardie will acquire AZEK for a combination of cash and James Hardie shares with a total transaction value of $8.75 billion, including AZEK’s net debt of approximately $386 million as of December 31, 2024.
Under the terms of the Agreement, AZEK shareholders will receive $26.45 in cash and 1.0340 ordinary shares of James Hardie to be listed on the New York Stock Exchange for each share of AZEK common stock they own. The stock and cash consideration represents a total per-share value of $56.88, based on the closing stock price of AU$46.80 per share of James Hardie’s CHESS Depositary Interest listing on the Australian Securities Exchange on March 21, 2025, which is a 26% premium to AZEK’s volume-weighted average price over the 30 trading days prior to March 21, 2025 and a 21% premium to AZEK’s VWAP over the 60 trading days prior to March 21, 2025. Upon completion of the transaction, James Hardie and AZEK shareholders are expected to own approximately 74% and 26%, respectively, of the combined company. Following the closing of the transaction, James Hardie’s ordinary shares will be listed on the NYSE and James Hardie is expected to be eligible for broader index inclusion in the U.S. in the future. James Hardie will maintain its current CDI listing and index inclusion on the ASX.
The combination of James Hardie and AZEK will create a leading exterior and outdoor living building products growth platform with efficient scale and profitability supported by leading brands driving material conversion. By bringing together highly complementary products that span siding, exterior trim, decking, railing and pergolas, the combined company will offer a comprehensive and innovative material replacement solution to homeowners, customers and contractors.
“This combination with AZEK is an extraordinary opportunity to accelerate our growth strategy, deliver enhanced and differentiated solutions to our customers and drive shareholder value,” said Aaron Erter, James Hardie CEO. “We are uniting two highly complementary companies with large material conversion opportunities and shared cultures centered around providing winning solutions to our customers and contractors. Together, we will be well positioned to drive sustained above market growth as a leader across attractive categories for the exterior of the home. The consumer journeys for siding and decking often overlap and both companies have excelled at demand creation for the homeowner and innovative products and solutions for the contractor. Additionally, given the substantial opportunity to drive synergies and James Hardie and AZEK’s shared discipline around operational efficiency, we expect to significantly enhance the combined company’s profitability and cash flow. On behalf of the entire James Hardie team, I look forward to welcoming the talented AZEK team to the James Hardie family and together extending our track record of success.”
“Over AZEK’s more than 40-year history, we have made strategic investments in innovation, capabilities and talent, driving sustained above-market growth with our industry-leading brands, including TimberTech and AZEK Exteriors, and delivering an attractive margin profile with significant opportunities for expansion ahead. Building upon our proven track record of success, today marks an exciting start to the next phase of AZEK’s journey to further accelerate growth and material conversion,” said AZEK CEO, Jesse Singh. “Together with James Hardie, we are delivering value to AZEK shareholders and providing them meaningful participation in the long-term secular and financial growth opportunities created by the combined company. We are bringing together two customer-centric organizations with a shared commitment to innovation and building a better, more sustainable and resilient future, and we are excited about the opportunities ahead.”
Compelling Strategic and Financial Benefits
Creates a leading exterior and outdoor living growth platform: The transaction brings together two high-growth companies with complementary product offerings across major categories on the exterior of the home. James Hardie’s and AZEK’s brands benefit from efficiencies of scale and innovative products and, when combined, will create a compelling proposition across the customer value chain. The addition of AZEK, which has averaged more than 15% net sales growth in its residential business segment over the last seven years, will materially enhance James Hardie’s top-line growth trajectory. As a result of the combination, over the next five years, the annual growth rates of James Hardie’s net sales and adjusted EBITDA are expected to accelerate by more than 250 basis points and 300 basis points, respectively.
Accelerates material conversion-led growth: Both companies have a long history of material conversion-led growth; each offering products with compelling aesthetics and durability. The combined company will increase its total addressable market in North America to $23 billion and have a meaningful opportunity to drive accelerated material conversion across its combined product offering.
Provides customers a comprehensive solution of sustainable exterior and outdoor living brands: Together, James Hardie and AZEK provide a full-wrap and complementary solution for the exterior of the home, offering beautiful, resilient, fire, pest and weather-resistant products that are easy to install with reduced maintenance and lower lifecycle costs. The combination will allow James Hardie to deliver significant benefits to all of its partners throughout the customer value chain.
Delivers best-in-class financial profile: The combination of James Hardie and AZEK creates a company with an accelerated growth rate, peer-leading profitability and robust cash generation. In the 12-month period ended December 31, 2024, James Hardie and AZEK generated $5.9 billion in net sales, more than $1.8 billion in adjusted EBITDA and adjusted EBITDA margin of 31%, on a combined company basis and including the total expected run-rate benefit of synergies. The transaction is also expected to be accretive to James Hardie’s cash earnings per share1 in the first full fiscal year after the closing of the transaction. Once run-rate cost synergies are achieved, the combined company is expected to generate robust annual free cash flow of greater than $1 billion, which James Hardie intends to use to support organic growth, deleverage and fund ongoing share repurchases. Further, the transaction delivers a return on invested capital in excess of James Hardie’s cost of capital within the medium term. James Hardie plans to execute up to $500 million of share repurchases in the 12 months after the closing of the transaction. At close, pro forma leverage is expected to be ~2.8x net debt to LTM adjusted EBITDA. James Hardie is targeting a leverage ratio below 2.0x net debt to LTM adjusted EBITDA, inclusive of share repurchases, by the end of the second full fiscal year after the closing of the transaction. The combined business is also well positioned for a valuation uplift as a leading growth platform in building products with a strengthened financial profile, and greater global institutional investor relevance through two major stock exchange listings.
Unlocks significant value through cost and commercial synergies: Through at least $125 million of cost synergies and $500 million of commercial synergies, James Hardie expects to achieve at least $350 million of additional annual adjusted EBITDA. The full run-rate impact of cost and commercial synergies is expected to be realized three and five years post the closing of the transaction, respectively. The commercial synergies are underpinned by significant wallet share opportunities with each company’s existing contractor network and customer base, as well as through enhanced offerings and a national footprint across North America. As a result, the Company believes there could be a meaningful upside to the commercial synergies.
Governance and Leadership
James Hardie CEO Aaron Erter will serve as Chief Executive Officer, and James Hardie CFO Rachel Wilson will serve as Chief Financial Officer, of the combined company.
Upon the closing of the transaction, Howard Heckes, Gary Hendrickson and Jesse Singh will join James Hardie’s Board of Directors.
Transaction Details
The boards of directors of both James Hardie and AZEK have each unanimously approved the transaction. The transaction is currently anticipated to close in the second half of calendar year 2025 and is subject to customary closing conditions, regulatory approvals and AZEK shareholder approval. A vote by James Hardie’s shareholders is not required for James Hardie to issue shares in connection with the transaction.
James Hardie intends to fund the cash portion of the transaction through debt financing and has secured a fully committed bridge financing facility led by Bank of America and Jefferies LLC.
James Hardie and AZEK Full Year 2025 Guidance
James Hardie reaffirmed its fiscal year 2025 guidance provided on November 13, 2024, for North American volume and EBIT Margin, as well as Adjusted Net Income, not including any acquisition related costs.
AZEK also reaffirmed all elements of its full-year fiscal 2025 and second quarter of fiscal 2025 outlook provided on February 4, 2025.
