Industry News
Building Materials Sector Sees Acquisitions And An IPO
6 years, 3 months ago Posted in: Industry News 1

The companies building homes and those providing the materials to do so continue to draw private equity attention.

By Mohammed Aly Sergie SOURCE: Wall Street Journal Blog

Within the last month, TPG Capital LP and Oaktree Capital Management agreed to buy the North American operations of Taylor Wimpey PLC, leading a $955 million deal, while Blue Wolf Capital Partners LLC bought the assets of American Builders Supply Inc. and Charlesbank Capital Partners-backed building materials wholesaler Cedar Creek Inc. will buy Epperson Lumber Sales Inc.

On Friday, one portfolio company in the sector filed for an initial public offering. CPG International Inc., backed by AEA Investors LP, plans to raise up to $150 million.

The company, which was acquired by AEA in 2005, didn’t disclose details about the selling shareholders in its filing with the Securities and Exchange Commission, but said AEA will still control a majority of the voting power of its common stock after the IPO.

Minority owners include Pamlico Capital, formerly known as Wachovia Capital Partners, and Clearview Capital.

Scranton, Pa.-based CPG makes synthetic building products that replace wood and metal materials used in decks, porches, and bathrooms. Its brand names include AZEK Building Products, Scranton Products and Vycom brands.

Net sales at CPG have rebounded sharply to $327.5 million in 2010 from $266.9 million a year earlier, and the company swung to a net profit of $9.4 million from a net loss of $10.3 million a year earlier, highlighting a rebound that the remodeling sector has experienced amid a very slow recovery of the overall housing industry.

CPG plans to use IPO proceeds to repay debt and for general corporate purposes.

The company closed on $350 million in new senior secured facilities in February. In January, it got ratings upgrades from Standard & Poor’s and Moody’s. “We expect that residential end markets, where CPG derives approximately two-thirds of its sales, will continue to improve over the next year because of a gradual recovery in housing markets,” S&P said, but the rating agency warned that the company could be hurt by high costs for raw materials including resin.

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One Response

  1. […] Building Materials Sector Sees Acquisitions And An IPO (www.compositology.com) 04/23/2011 […]

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