Fort Capital Partners is pleased to announce that Hardwoods Distribution Inc. (TSX:HWD) has acquired the assets of Rugby Architectural Building Products for a purchase price of US$107 million plus another US$13 million based on future performance (“Earn-Out Consideration“).
The cash portion of the Purchase Price was financed through debt and the net proceeds of a C$50M bought deal of common shares that was launched concurrently with announcement of the transaction.
Rugby is a leading U.S. wholesale distributor of non-structural architectural grade building products to customers that supply end-products to the commercial market. Headquartered in Concord, New Hampshire, Rugby has a strong national U.S. footprint, operating 31 strategically located facilities that serve over 22,000 customers across 48 states.
“This is a highly strategic business combination that brings together two successful, growth-oriented companies to create the number one distributor in our industry,” commented Rob Brown, Hardwoods’ President and CEO. “The transaction meets our objective of increasing our distribution capability in additional U.S. markets, particularly in the Eastern U.S. Rugby’s business model is very similar to our own and its product focus and customer base are highly complementary. Together, we are creating a larger, more efficient platform for distributing our respective product lines.”
The transformative transaction is expected to increase Hardwoods’ revenues and EBITDA by over 60% and 45%, respectively. Adding the potential for synergies and improved use of Hardwood’s balance sheet, the transaction is anticipated to be immediately accretive to CFPS and EPS. Hardwoods announced an increase to its annual dividend from C$0.22 per share to C$0.25 per share, a ~14% increase, upon completion of the transaction.
Fort Capital acted together with Cormark Securities as joint financial advisors to Hardwoods.