PGT Captures Deal in Active Building Products Space

The company will pay $92 million for smaller competitor NewSouth Window Solutions amid a wave of M&A activity in the industry.

Share This Post

Share on facebook
Share on linkedin
Share on twitter
Share on email

Impact-resistant windows and doors supplier PGT Innovations Inc. (PGTI) on Tuesday, Dec. 10 agreed to acquire energy-efficient windows and doors manufacturer NewSouth Window Solutions LLC.

The $92 million cash deal, which PGT expects to close in the first quarter of 2020, is the company’s only add-on of 2019, though the Venice, Fla.-based acquirer — a leader in the residential windows and doors sector with an $814 million market cap — does have some deal history in the fragmented building products industry.

In July 2018, PGT Innovations acquired WWS Acquisition LLC, which does business as Western Window Systems, from Perella Weinberg Partners LP for $360 million.

For its part, Tampa, Fla.-based NewSouth, known for its direct-to-consumer model, expects to generate between $82 million and $85 million in 2019 net sales, with an “Ebitda margin in the mid-teens,” according to PGT’s Tuesday statement.

PGT Innovations CFO Sherri Baker told The Deal via e-mail that the company was attracted to “opportunities for cost synergies in procurement and operating efficiencies,” and the target’s digitally savvy business model, as well as its “ability to reach consumers with relatively smaller order sizes than what our typical existing dealer currently services.”

PGT Innovations acquisition comes during a time of strong M&A activity in the building products space, though some players in the industry have also faced pressure to shrink or shift portfolio strategy by activist investors.

The Deal recently labeled a number of construction companies activist targets, including engineering and construction firm Fluor Corp. (FLR). PGT Innovations may have the makings of an activist target, as well. The company recently released what CEO Jeff Jackson called a disappointing third quarter earnings report, and its stock was down almost 12% in 2019 through Thursday.

Six members of PGT Innovations’ 9-person board have served in their roles for more than 12 years, according to relationship mapping service BoardEx, a sister company of The Deal.

Meanwhile, private equity-backed companies in the industry that are potentially ripe for a takeover include H.I.G. Capital LLC-backed Empire Today LLC and Linsalata Capital Partners Inc.-backed A. B. Property Services Inc.

On Tuesday’s transaction, PGT Innovations tapped SunTrust Robinson Humphrey Inc. for financial guidance, while Jones Day provided legal advice.

NewSouth turned to Raymond James & Associates Inc. for financial advice and Natalie Annis of Foley & Lardner LLP for legal counsel.

NewSouth did not immediately return a request for further comment.

About the author

Alexandra Garfinkle
| + posts

Subscribe To Our Weekly Newsletter: Executive Insight

A macro view of the global leadership landscape, trends, and implications for you and your business.

More To Explore

Potbelly Installs New CEO After Deal With Ex-CEO

The Deal suggested in February and March that a dissident group including the company’s former CEO Brian Keil were seeking to oust the embattled chain’s current top executive.

Slight Shift in Gender Diversity Across Technology

The most prominent technology appointments ranked by the market capitalization of the company in 2020 so far show that the top ten roles have a male to female gender ratio of 60:40. BoardEx analysis shows that this masks the actual view of gender diversity in technology talent. The article also takes a brief look at where technology professionals in the FTSE 350 and S&P 500 have studied.

Amplify your network

How do you connect to the more than 3 million people and companies profiled in BoardEx?
Scroll to Top

Download your free copy of the recently published BoardEx Global Gender Diversity Report