KKR taking this one out and bringing PanAmSat to the market for a payoff.
Masonite International being acquired by U.S. company KKR for $3.1 billion
Wed Dec 22, 7:08 PM ET
STEVE ERWIN
TORONTO (CP) - Canadian door maker Masonite International Corp. is being acquired by a U.S. buyout company in a friendly deal worth $3.1 billion Cdn that appears aimed at funding the manufacturer's international expansion.
The Toronto area company said late Wednesday it had struck a definitive agreement to be acquired by an affiliate of Kohlberg Kravis Roberts & Co., a major New York-based private investor, in an all cash deal. The transaction is valued at $40.20 a share or about $3.1 billion.
Masonite, formerly known as Premdor, said that the company's senior executives will continue to run the company and hold about five per cent of its shares.
Masonite, which makes and sells steel and wood doors and windows and has 75 factories in 16 countries, had nearly $1.8 billion US in sales last year. It employs about 14,000 people and sells its products to customers in over 50 countries.
Masonite has been expanding this year through acquisitions of its own in eastern Europe and Asia after a major expansion in the United States more than two years ago.
"Our entire management team will continue to focus on providing superior service and products to our customers worldwide," said Philip Orsino, president and CEO of Masonite.
Paul Raether, a KKR executive, said the acquisition will help Masonite continue its global expansion.
"Masonite is a well-managed, well-positioned, innovative company with a global customer base," he said. "We expect Masonite to continue its expansion as a leading manufacturer of door products and look forward to working with management on the next stage of the company's development."
KKR spokeswoman Molly Morse would not comment further on the proposed deal for Masonite, except to note that the New York-based private equity firm has been actively pursuing industrial and homebuilding assets.
In October, Masonite posted a near 20 per cent increase in its third-quarter profits and reported that it had more than $125 million in cash at quarter's end. Orsino told investors at that time that the "first use" of excess cash would be for Masonite to make the an acquisition itself, or pay down debt.
In March, the company completed its acquisition of the entry-door business of U.S.-based Stanley Works for $160 million US. And In May, Masonite announced a deal for Kronodoor, which serves Central and Eastern European markets through manufacturing facilities in the Czech Republic and Poland. It also bough a 50-per-cent share in a subsidiary of Samling Strategic Corp., which makes moulded door facings at a factory in Bintulu, Malaysia, in a $25-million US deal completed in the third quarter.
The acquisition by KKR, approved by the Masonite board, is subject to customary conditions, including regulatory and court approvals. A shareholders meeting to vote on the deal is expected to be held Feb. 18 and the takeover is expected to close by late February.
The Bank of Nova Scotia will provide financing for the deal.
Wednesday's announcement was made after stock markets had closed. Before trading in its shares were halted in mid afternoon pending the news release, the stock (TSX:MHM - news) had gained 75 cents to $35.50 on the Toronto Stock Exchange.
KKR is one of the world's oldest and best known private equity firms specializing in management buyouts. Over the last three decades, the company has invested in more than 115 transactions with a total value of $138 billion.
In Canada, KKR was a major investor a few years ago in the takeover of Shoppers Drug Mart, the country's largest drug store operator. It later sold its shares in the company at a handsome profit.
KKR and the Ontario Teachers Pension Fund paid $3 billion to BCE Inc. to acquire the Yellow Pages telephone directories business of Bell Canada in 2002. The New York fund made a profit on its investment when Yellow Pages was later spun off as an income trust.
A look at the $3.1-billion takeover offer announced Wednesday for Canada's Masonite International by U.S.-based private equity investor Kohlberg Kravis Roberts & Co.:
Masonite: Global door and windows maker with its corporate headquarters in Mississauga, Ont. Operates 75 plants in 16 countries in North America, South America, Europe, Asia and Africa.
Workforce: 14,000 employees.
KKR: One of the world's oldest private equity firms specializing in management buyouts, with offices in New York, Menlo Park, Calif. and London, England.
Investments: Has invested in more than 115 transactions with a total value of $138 billion US over last 28 years.
Deal details: All-cash transaction, worth $40.20 Cdn a share. The stock closed at $35.50 in Wednesday trading on the Toronto Stock Exchange.
Approval requirements: In addition to customary regulatory approvals, requires that two-thirds of votes cast by Masonite shareholders at special meeting favour the deal, and also needs a simple majority of votes cast by shareholders other than members of senior management of Masonite.
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