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James Hardie to Boost Market Expansion With the Acquisition of AZEK
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James Hardie Industries plc (JHX - Free Report) has entered into a definitive agreement with The AZEK Company Inc. (AZEK - Free Report) to acquire it for a total transaction value of $8.75 billion, including the latter’s net debt of approximately $386 million as of Dec. 31, 2024. The transaction will be executed through a combination of cash and James Hardie shares.
Terms of JHX’s Agreement With AZEK
Per the agreement, AZEK’s shareholders will receive $26.45 in cash along with 1.0340 ordinary shares of James Hardie, which are to be listed on the New York Stock Exchange, for each share of AZEK common stock they own. Upon the closure of this strategic transaction, the shareholders will own about 74% and 26%, respectively, of James Hardie and AZEK combined.
The acquisition is expected to close in the latter half of the calendar year 2025, upon the satisfaction of customary closing conditions, regulatory approvals and AZEK shareholder approval.
Potential Benefits of James Hardie’s Acquisition
James Hardie, being a provider of high-performance, low-maintenance building products and solutions, after acquiring AZEK, a leading manufacturer of high-performance, low-maintenance and environmentally sustainable outdoor living products, will combinedly offer a diversified portfolio and enhance the customer value chain. This amalgamated setup will be able to expand its market reach in North America to $23 billion, unlocking the opportunity to drive accelerated material conversion across its combined product offering.
Furthermore, JHX and AZEK together will offer customers a comprehensive solution of sustainable exterior and outdoor living brands and result in a company having an accelerated growth rate, peer-leading profitability and robust cash generation. In the trailing 12 months ended Dec. 31, 2024, both companies (on a combined basis) generated $5.9 billion in net sales, more than $1.8 billion in adjusted EBITDA and an adjusted EBITDA margin of 31%.
James Hardie is expected to generate a robust annual free cash flow of more than $1 billion after the amalgamated company achieves the run-rate cost synergies. Also, this strategic transaction is expected to prove accretive for JHX’s cash earnings per share in the first fiscal year after closure. Notably, after the acquisition, JHX expects to execute up to $500 million of share repurchases in the first 12 months.
JHX Stock Price Performance
In the year-to-date period, JHX stock has lost 23% compared with the Zacks Building Products – Miscellaneous industry’s 4.2% decline. The ongoing housing market uncertainties, especially in multi-family starts, and lingering raw material headwinds are adversely impacting the company’s prospects. However, with this strategic buyout, JHX is likely to foster its sales trend across different businesses and bolster its growth in the upcoming period. The optimism about the housing market in the latter half of the calendar year 2025 is likely to bode well for the company.
Image Source: Zacks Investment Research
Moreover, the company has a VGM Score of B, supported by a Growth Score of B and a Momentum Score of A.
JHX’s Zacks Rank & Key Picks
James Hardie currently carries a Zacks Rank #4 (Sell).
Here are some better-ranked stocks from the Construction sector.
NX delivered a trailing four-quarter earnings surprise of 115.2%, on average. The stock has lost 24.7% in the past six months. The Zacks Consensus Estimate for NX’s fiscal 2025 sales and earnings per share (EPS) implies an increase of 44% and 16.4%, respectively, from a year ago.
Gibraltar Industries, Inc. (ROCK - Free Report) currently carries a Zacks Rank #2 (Buy). ROCK delivered a trailing four-quarter earnings surprise of 1.8%, on average. The stock has lost 9% in the past six months.
The Zacks Consensus Estimate for ROCK’s 2025 sales and EPS implies an increase of 9.8% and 15.5%, respectively, from a year ago.
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James Hardie to Boost Market Expansion With the Acquisition of AZEK
James Hardie Industries plc (JHX - Free Report) has entered into a definitive agreement with The AZEK Company Inc. (AZEK - Free Report) to acquire it for a total transaction value of $8.75 billion, including the latter’s net debt of approximately $386 million as of Dec. 31, 2024. The transaction will be executed through a combination of cash and James Hardie shares.
Terms of JHX’s Agreement With AZEK
Per the agreement, AZEK’s shareholders will receive $26.45 in cash along with 1.0340 ordinary shares of James Hardie, which are to be listed on the New York Stock Exchange, for each share of AZEK common stock they own. Upon the closure of this strategic transaction, the shareholders will own about 74% and 26%, respectively, of James Hardie and AZEK combined.
The acquisition is expected to close in the latter half of the calendar year 2025, upon the satisfaction of customary closing conditions, regulatory approvals and AZEK shareholder approval.
Potential Benefits of James Hardie’s Acquisition
James Hardie, being a provider of high-performance, low-maintenance building products and solutions, after acquiring AZEK, a leading manufacturer of high-performance, low-maintenance and environmentally sustainable outdoor living products, will combinedly offer a diversified portfolio and enhance the customer value chain. This amalgamated setup will be able to expand its market reach in North America to $23 billion, unlocking the opportunity to drive accelerated material conversion across its combined product offering.
Furthermore, JHX and AZEK together will offer customers a comprehensive solution of sustainable exterior and outdoor living brands and result in a company having an accelerated growth rate, peer-leading profitability and robust cash generation. In the trailing 12 months ended Dec. 31, 2024, both companies (on a combined basis) generated $5.9 billion in net sales, more than $1.8 billion in adjusted EBITDA and an adjusted EBITDA margin of 31%.
James Hardie is expected to generate a robust annual free cash flow of more than $1 billion after the amalgamated company achieves the run-rate cost synergies. Also, this strategic transaction is expected to prove accretive for JHX’s cash earnings per share in the first fiscal year after closure. Notably, after the acquisition, JHX expects to execute up to $500 million of share repurchases in the first 12 months.
JHX Stock Price Performance
In the year-to-date period, JHX stock has lost 23% compared with the Zacks Building Products – Miscellaneous industry’s 4.2% decline. The ongoing housing market uncertainties, especially in multi-family starts, and lingering raw material headwinds are adversely impacting the company’s prospects. However, with this strategic buyout, JHX is likely to foster its sales trend across different businesses and bolster its growth in the upcoming period. The optimism about the housing market in the latter half of the calendar year 2025 is likely to bode well for the company.
Image Source: Zacks Investment Research
Moreover, the company has a VGM Score of B, supported by a Growth Score of B and a Momentum Score of A.
JHX’s Zacks Rank & Key Picks
James Hardie currently carries a Zacks Rank #4 (Sell).
Here are some better-ranked stocks from the Construction sector.
Quanex Building Products Corporation (NX - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
NX delivered a trailing four-quarter earnings surprise of 115.2%, on average. The stock has lost 24.7% in the past six months. The Zacks Consensus Estimate for NX’s fiscal 2025 sales and earnings per share (EPS) implies an increase of 44% and 16.4%, respectively, from a year ago.
Gibraltar Industries, Inc. (ROCK - Free Report) currently carries a Zacks Rank #2 (Buy). ROCK delivered a trailing four-quarter earnings surprise of 1.8%, on average. The stock has lost 9% in the past six months.
The Zacks Consensus Estimate for ROCK’s 2025 sales and EPS implies an increase of 9.8% and 15.5%, respectively, from a year ago.