By Rhiannon Hoyle

Building materials company James Hardie Industries has agreed to buy AZEK, a maker of home decking, railing and pergolas, in a cash-and-stock deal worth $8.75 billion.

The deal is a doubling down on the U.S. housing market for James Hardie, a top supplier of home sidings in North America, and combines a range of common products for home renovations under one roof, the companies said.

James Hardie said shareholders in Chicago-based AZEK will get $26.45 in cash and 1.034 shares of James Hardie for each AZEK share they own. The combined company will be listed on the New York Stock Exchange.

The deal is worth roughly $56.88 a share, a 26% premium to AZEK's 30-day volume-weighted average price, James Hardie said.

"This is really, first and foremost, about growth," James Hardie Chief Executive Aaron Erter said on a call with analysts.

AZEK has averaged more than 15% net sales growth annually in its residential business over the past seven years, he said. Over the next five years, annual growth in James Hardie's net sales and adjusted earnings before interest, taxes, depreciation and amortization is expected to accelerate by more than 250 basis points and 300 basis points, respectively, as a result of the acquisition, it said.

Combining James Hardie and AZEK's siding, decking and exterior-trim products makes sense not just for the companies, but for customers and contractors, Erter said. "You could not ask for two more complementary companies," he said.

AZEK shareholders are expected to own about 26% of the combined company.

Erter said he is comfortable with the deal value, which is a roughly 37% premium to AZEK's closing price Friday. "We are buying one of the most valuable building products companies in the world," he said.

Australia-listed shares of James Hardie were more than 10% lower in Sydney on Monday morning.

James Hardie was founded in Australia but is now based in Ireland. It began selling fiber cement products in the U.S. more than three decades ago.

The company will maintain its listing in Australia after the deal completes. James Hardie's stock is expected to be eligible for broader index inclusion in the U.S. in the future, it said.

Erter will serve as CEO of the combined company, and James Hardie's chief financial officer, Rachel Wilson, will be its CFO.

The enlarged James Hardie will have a $23 billion total addressable market in North America, more than twice the size it has today, Erter said.

AZEK is almost exclusively U.S.-based. James Hardie today generates 74% of its net sales in North America, versus 14% in Asia-Pacific and 12% in Europe.

"We do acknowledge... it is a changing customer landscape out there," Erter said.

Economists at global banks are increasingly taking a gloomier outlook on the U.S. economy, as trade uncertainty risks chilling private-sector investment.

On the call, Erter defended the acquisition's timing. "We are able to focus our efforts on integration," he said. "As the market recovers, we will be in that much better a position to accelerate."

The deal was unanimously approved by directors of both companies, and is expected to be finalized in the second half of the year, according to James Hardie.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

March 23, 2025 20:26 ET (00:26 GMT)

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