James Hardie offers $8.8 billion for US building products maker AZEK

By Scott Murdoch

March 24 (Reuters) - Fibre-cement maker James Hardie Industries JHX.AX said it would acquire U.S outdoor building products maker AZEK Company AZEK.N in a cash and stock deal worth $8.75 billion including debt, looking to boost growth with new offerings to homeowners.

AZEK shareholders will receive $26.45 in cash and 1.034 James Hardie shares for each AZEK share, bringing the total per share value to $56.88 per share, a 37.4% premium to AZEK's last close on Friday.

AZEK's board of directors has recommended accepting the offer, Hardie and AZEK said in a joint statement. AZEK manufactures wood decking, pergolas and outdoor living products.

James Hardie's Australian-listed shares dropped 10.4% in early trade on Monday, while the S&P/ASX200 .AXJO was off 0.2%, reflecting the share dilution.

James Hardie and AZEK shareholders are expected to own around 74% and 26%, respectively, of the combined company.

"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," said Aaron Erter, James Hardie's chief executive officer.

The $8.75 billion price tag includes AZEK's $386 million worth of net debt, James Hardie said.

The company said it expected to achieve at least $350 million worth of additional earnings once the deal was complete. It added it expected there would be $125 million of cost savings in the deal.

The combined companies shares will be listed on the New York Stock Exchange with its Australian chess depositary interest (CDI) listing remaining in place, it said in a statement.

James Hardie was founded in Australia but is now headquartered in Ireland. Its management team is based in Chicago.

The firm intends to fund the cash portion of the transaction through debt financing and has secured a fully committed bridge financing facility, it said without disclosing any further details.

James Hardie also plans to execute up to $500 million of share repurchases in the 12 months after the closing of the transaction, it added.

The deal is anticipated to close in the second half of calendar year 2025, the firm said, subject to regulatory approvals.