Last week in broad daylight, the American pirates running James Hardie swept in and stole the company from its Australian shareholders. While it’s being dressed up as a strategic acquisition (of AZEK, a faux timber decking company headquartered 3 km away from James Hardie’s main office in Chicago), the real strategy is hidden from view. The deal is awful for James Hardie investors, employing their cash and lower-multiple scrip to overpay for a company that generates profoundly inferior returns on capital, and with barely any cost synergies.
In reality, the deal is an enabling mechanism for James Hardie to escape the Australian jurisdiction, one where shareholders can impose sane limits on executive remuneration and prevent management from entrenching themselves in perpetuity. In their minds, that is a seventh heaven well worth tanking the company to reach.
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