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 up to 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.
Hardwoods Distribution Inc. is one of North America’s largest distributors of high-grade hardwood lumber, sheet goods and architectural millwork to the cabinet, moulding, millwork, furniture and specialty wood products industries. Hardwoods current operates a network in North America of 32 distribution centres, as well as one sawmill and kiln drying operation.
Rugby Architectural Building Products is a full-line wholesale distributor of specialty building products. Its primary business is the wholesale distribution of non-structural architectural grade building products sold principally to customers who supply end-products for the commercial, industrial, retail, residential and institutional markets.
Fort Capital Inc. is an investment bank that works with public and private companies in Canada. The firm draws from collective capital markets experience to provide its clients with proven, accessible and independent investment banking advice and transaction execution. For more information, visit fortcapital.ca.