AZEK stock soars after James Hardie buys outdoor products maker for $8.75B

Takeaways

• Australia's James Hardie Industries is acquiring AZEK in a $8.75 billion cash-and-stock deal that will combine the two outdoor building materials firms.
• AZEK investors will receive total compensation of $56.88 per share, 37% above the stock's closing price on Friday.
• AZEK shares soared after the news, but James Hardie shares listed in the U.S. plummeted.

The AZEK Company shares (AZEK), which manufacture outdoor living products, soared by 14% after it was announced that James Hardie Industries of Australia (JHX), a building materials manufacturer, had agreed to purchase the company for $8.75 Billion in cash and stocks. This includes $386 MILLION of net debt.

AZEK shareholders are entitled to receive $26.45 cash per share, plus 1.034 James Hardie share, for total compensation of $56.88. That's a 37% premium over AZEK’s closing price on Friday.

James Hardie CEO Calls Acquisition 'Extraordinary Opportunity'

Aaron Erter, James Hardie’s CEO, called the purchase an “extraordinary opportunity to accelerate growth strategy, deliver enhanced solutions and differentiated offerings to our customers and to drive shareholder value.” Erter said James Hardie expects to “significantly enhance the combined company’s profitability and cashflow.”

AZEK manufactures TimberTech decking, railings, Versatex, AZEK trim, and StruXure Pergolas. James Hardie is behind such brands as Hardie Plank, Hardie Panel, Hardie Trim, Cemboard, and Prevail.

The transaction should close in the second quarter of this year. 

James Hardie shares listed in the U.S. fell 18% following this news. Both companies’ stocks have traded in negative territory during the past 12 months.