Beacon buys Roofing Supply Group
Beacon Roofing Supply, Inc. has acquired Dallas-based Roofing Supply Group for approximately $1.1 billion.
Roofing Supply Group is a roofing products distributor owned by investment firm Clayton, Dubilier & Rice (“CD&R”) that maintains 83 locations in 24 states, including key markets such as California, Florida, Texas, Seattle and Spokane.
The transaction provides mutual benefits, such as $286 million in cash and $291 million of Beacon common stock to RSG shareholders, plus a refinancing of approximately $565 million of RSG's debt.
In return, Beacon's revenues will grow to $3.7 billion, and the combined company will operate 356 branches in 45 states and six Canadian provinces. Additionally, Beacon will have a greater diversity of products on offer.
“We long have believed that a combination of Beacon and RSG would be tremendously beneficial to our shareholders, customers and employees," said Beacon chairman Robert Buck. "RSG complements Beacon geographically, especially in the Southern and Western United States, and RSG’s management shares Beacon’s belief that success comes from dedication and loyalty to customers and employees. We are pleased that CD&R will become a major shareholder. This is a momentous event for these two great companies and for the future of the roofing distribution industry.”
“I am thrilled to welcome RSG to the Beacon family," added Beacon president and CEO Paul Isabella. "Our company will benefit greatly by joining forces with RSG’s talented and experienced employees who have developed strong and enduring relationships with customers in their local communities. By building on these relationships, Beacon will drive strong growth, bolster our existing customer base and enhance our position across key regions in the South, West and the Pacific Northwest. The acquisition also adds scale to our commercial business and expands our capabilities within our complementary businesses. This acquisition is a milestone in the long and successful history of Beacon.”
Other benefits of the merger include the compatibility of the two companies' "Greenfield" growth strategies.
Additionally, Beacon expects the acquisition to generate approximately $50 million in annual run-rate synergies.
“By joining forces with Beacon, we create a market-leading enterprise with exceptional prospects, bring together two highly experienced and proven management teams, and add capabilities to provide our valued customers with the highest levels of service," said RSG CEO Peter Arvan. "It’s a great moment for RSG, representing a strong validation of the business the team has built, as well as a compelling opportunity to capitalize on the strengths of both companies.”
The transaction is expected to close on Oct. 1, 2015 and is subject to the expiration or termination of the applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, as well as other customary closing conditions.
Following completion, Isabella will continue on in his role as president and CEO of the combined company, with Buck in place as chairman. Arvan will manage the RSG business and report to Isabella.
Additionally, Philip Knisely, chairman of RSG and an advisor to CD&R Funds, as well as CD&R Partner Nathan Sleeper, will join the board of directors.