Jeld-Wen reaches purchase agreement for Pa. facility
Jeld-Wen Holding, Inc., in compliance with the court-ordered divestiture of its Towanda, Pa., business and related assets, has reached an asset purchase agreement for the sale of Towanda to Woodgrain Inc. for approximately $115 million. The deal is subject to certain adjustments and closing conditions.
The deal is a culmination of a legal battle dating back to 2016, when Jeld-Wen was sued over antitrust concerns. Door and Window Market magazine offers more context and background for the dramatic turn of events:
"The ruling for Jeld-Wen to divest of its Towanda plant stems from a lawsuit filed in June 2016, by San Antonio-based door maker Steves and Sons. The case alleged that Jeld-Wen violated U.S. antitrust laws when it merged with a competitor, CraftMaster Manufacturing Inc. (CMI), acquiring a Towanda, Pennsylvania-based doorskin plant. A trial-by-jury process ruled that Jeld-Wen’s acquisition of CMI did, in fact, violate antitrust provisions. In February 2021, the United States Court of Appeals for the Fourth Circuit Court upheld the order and the demand for Jeld-Wen to sell its plant."
Jeld-Wen fought the ruling and asked the court to overturn orders requiring divestiture of its facility, but the fight now appears to be over.
"After many years of working through the court-ordered divestiture of Towanda, we have now reached an important inflection point in this process. We continue to evaluate our options in this unprecedented legal proceeding, but following a thorough review, we have concluded that it is in the best interest of the company and its stakeholders to proceed with closing the transaction at this time. Regardless, Jeld-Wen is well positioned to continue to service and supply its door customers at the high level they have come to expect from us," said Jeld-Wen CEO William J. Christensen.
"While we are disappointed with the court ruling, we remain fully committed to advancing our transformation efforts to solidify our strong and resilient foundation. We will persist in investing in our business, focusing on initiatives that drive both cost reductions and sustainable growth," said Christensen.
Jeld-Wen is expressing uncertainty regarding fallout from the divestiture agreement, sharing in a press release:
"Given the uncertainty around volumes related to the assignment of customer contracts and our obligations within transition services and supply agreements, the precise future financial impact to Jeld-Wen is unclear. However, based on management's best estimates at this time, the company believes that the sale of Towanda would result in an annual reduction of approximately $150 million to $200 million of revenue and approximately $25 million to $50 million of EBITDA during the twelve months following the closing of the divestiture. We expect a non-cash pre-tax impairment charge of approximately $25 million to $35 million and expect the divestiture to be approximately neutral to net debt leverage."
Woodgrain, meanwhile, shared:
“The Towanda plant is a strategic acquisition for Woodgrain. The addition of molded door skin and exterior trim manufacturing fits perfectly within our business model and growth plan. Towanda has a great customer base whom we know well, and we look forward to continuing to service and grow share with existing customers” said Kelly Dame, CEO and president of Woodgrain.
“Woodgrain takes pride in being the employer of choice in the communities we operate, and we believe that our people are our greatest asset. We look forward to adding the skilled Towanda associates back to the Woodgrain family and plan to maintain all the current employees of the Towanda plant,” commented Brooks Dame, VP of Woodgrain's Door Division.
Wells Fargo is serving as the exclusive financial advisor to Woodgrain.
The sale of the Towanda plant is expected to close as early as December 31, 2024. For more specifics of the case, you can read case details here.
