MITER Brands to Acquire PGT Innovations for $42.00 Per Share in Cash
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Insights
The definitive merger agreement between MITER and PGT Innovations Inc. (PGTI) at a 60% premium over PGTI’s unaffected share price signifies a substantial valuation and a bullish sentiment on PGTI's intrinsic value and future prospects. The all-cash transaction eliminates immediate dilution concerns for MITER's shareholders and provides PGTI shareholders with a significant liquidity event. The financing of the deal through equity investment by Koch Equity Development LLC indicates strong backing and confidence in the strategic move.
From a financial perspective, the termination of PGTI's prior merger agreement with Masonite, in favor of MITER's superior proposal and the payment of an $84 million termination fee, are indicative of the high stakes and competitive nature of the industry. The acquisition is poised to create a more formidable player in the windows and doors manufacturing sector, potentially leading to synergies, cost savings and market expansion. However, the long-term success will depend on the integration process and realization of the projected synergies.
The merger between MITER and PGTI can be expected to reshape the competitive landscape of the windows and doors manufacturing industry. The combination of MITER's precision-built products with PGTI’s premium offerings suggests a strategy to capture a broader market segment. Their complementary product mix and geographic presence should enhance the overall value proposition to customers and may drive market share growth.
The potential for innovation and service improvements, as highlighted by the executives, could strengthen the combined entity's position against competitors. However, market reactions will be contingent upon the successful integration of the companies and whether the merger can indeed deliver the promised enhanced value to stakeholders.
The legal implications of this merger involve careful scrutiny of regulatory requirements and shareholder approvals. Given that the transaction is subject to PGTI shareholder approval and regulatory approval, the process will likely involve a thorough review to ensure compliance with antitrust laws and fair shareholder treatment. The fact that PGTI will become a privately held subsidiary of MITER post-transaction indicates a significant change in the governance structure for PGTI shareholders, who will need to assess the merits of the cash-out against the potential future growth as a standalone entity.
Additionally, the filing of a current report on Form 8-K with the U.S. Securities and Exchange Commission will provide transparency and detailed information regarding the terms of the transaction, which is crucial for investor confidence and legal compliance.
Represents
MITER’s
PGTI also announced that it has terminated its merger agreement with Masonite International Corp. (“Masonite”) dated December 17, 2023.
Executive Commentary
Matt
Jeffrey T. Jackson, PGTI President and Chief Executive Officer, said, “We are thrilled to have reached an agreement with MITER that maximizes value for PGTI shareholders. Since PGTI’s founding over 40 years ago, we have delivered profitable growth and created significant shareholder value by serving our customers with the high-quality window and door solutions they need. In MITER, we have found a strong partner that shares our commitment to safety, quality, and innovation. We are excited to join forces with the MITER team.”
"Koch Equity Development is excited to support the
Timing and Approvals
MITER and PGTI entered into their agreement after the PGTI Board unanimously determined that MITER’s proposal constituted a “Superior Proposal” as defined in PGTI’s merger agreement with Masonite, dated December 17, 2023. PGTI notified Masonite of its determination and Masonite waived its right to improve the terms of its offer. In accordance with PGTI’s merger agreement with Masonite, concurrent with the signing of PGTI’s definitive merger agreement with MITER, PGTI terminated its merger agreement with Masonite and MITER, on behalf of PGTI, paid the termination fee of
MITER’s transaction with PGTI is expected to close by mid-year 2024, subject to PGTI shareholder approval, regulatory approval and customary closing conditions. MITER has obtained commitment letters for the financing necessary to complete the transaction, which is not subject to a financing condition. Upon completion of the transaction, PGTI will become a privately held subsidiary of MITER and its common stock will no longer be traded on the NYSE.
For further information regarding the terms and conditions contained in the definitive transaction agreement, please see PGTI’s current report on Form 8-K, which will be filed with the
Advisors
KeyBanc Capital Markets Inc. and RBC Capital Markets are acting as financial advisors to MITER Brands and are providing committed debt financing, and Stinson LLP is acting as its legal counsel. Evercore is acting as exclusive financial advisor to PGTI, and Davis Polk & Wardwell LLP is acting as legal counsel to PGTI. Rothschild & Co US Inc. is acting as financial advisor to Koch Equity Development LLC and Jones Day is acting as its legal counsel.
About MITER Brands
Founded in 1947, MITER Brands is a residential window and door manufacturer that produces a portfolio of window and door brands for the new construction and replacement segments with an owner-operated, family-first approach. MITER Brands is the combination of two fast-growing regional product brands: MI Windows and Doors and Milgard Windows and Doors, and is a nationwide supplier of precision-built and energy-efficient products with more than 10 manufacturing facilities throughout
About PGT Innovations
PGT Innovations manufactures and supplies premium windows, doors, and garage doors. Its highly engineered and technically advanced products can withstand some of the toughest weather conditions on Earth and are revolutionizing the way people live by unifying indoor and outdoor living spaces. PGT Innovations creates value through deep customer relationships, understanding the unstated needs of the markets it serves, and a drive to develop category-defining products. The PGT Innovations family of brands include CGI®, PGT® Custom Windows and Doors, WinDoor®, Western Window Systems, Anlin Windows & Doors, Eze-Breeze®, Eco Window Systems, NewSouth Window Solutions, and Martin Door. The company’s brands, in their respective markets, are a preferred choice of architects, builders, and homeowners throughout
About Koch Equity Development LLC
Koch Equity Development (“KED”) is the principal investment and acquisition arm of Koch Industries, Inc. (“KII”), one of the largest privately held businesses in America. Since 2012, KED has deployed more than
Cautionary Statement Regarding Forward-Looking Statements
This communication contains “forward-looking statements” within the United States Private Securities Litigation Reform Act of 1995. You can identify these statements and other forward-looking statements in this document by words such as “may,” “will,” “should,” “can,” “could,” “anticipate,” “estimate,” “expect,” “predict,” “project,” “future,” “potential,” “intend,” “plan,” “assume,” “believe,” “forecast,” “look,” “build,” “focus,” “create,” “work,” “continue,” “target,” “poised,” “advance,” “drive,” “aim,” “forecast,” “approach,” “seek,” “schedule,” “position,” “pursue,” “progress,” “budget,” “outlook,” “trend,” “guidance,” “commit,” “on track,” “objective,” “goal,” “strategy,” “opportunity,” “ambitions,” “aspire” and similar expressions, and variations or negative of such terms or other variations thereof. Words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements.
Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such statements regarding the transactions contemplated by the Agreement and Plan of Merger, dated as of January 16, 2024, among PGTI, MIWD Holding Company LLC and RMR MergeCo, Inc. (the “Transaction”), including the expected time period to consummate the Transaction. All such forward-looking statements are based upon current plans, estimates, expectations and ambitions that are subject to risks, uncertainties and assumptions, many of which are beyond the control of PGTI, that could cause actual results to differ materially from those expressed in such forward-looking statements. Key factors that could cause actual results to differ materially include, but are not limited to, the expected timing and likelihood of completion of the Transaction, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the Transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreement; the possibility that PGTI’s stockholders may not approve the Transaction; the risk that the parties may not be able to satisfy the conditions to the Transaction in a timely manner or at all; risks related to disruption of management time from ongoing business operations due to the Transaction; the risk that any announcements relating to the Transaction could have adverse effects on the market price of PGTI’s common stock; the risk that the Transaction and its announcement could have an adverse effect on the parties’ business relationships and business generally, including the ability of PGTI to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers, and on their operating results and businesses generally; the risk of unforeseen or unknown liabilities; customer, shareholder, regulatory and other stakeholder approvals and support; the risk of potential litigation relating to the Transaction that could be instituted against PGTI or its directors and/or officers; the risk associated with third party contracts containing material consent, anti-assignment, transfer or other provisions that may be related to the Transaction which are not waived or otherwise satisfactorily resolved; the risk of rating agency actions and PGTI’s ability to access short- and long-term debt markets on a timely and affordable basis; the risk of various events that could disrupt operations, including severe weather, such as droughts, floods, avalanches and earthquakes, cybersecurity attacks, security threats and governmental response to them, and technological changes; the risks of labor disputes, changes in labor costs and labor difficulties; and the risks resulting from other effects of industry, market, economic, legal or legislative, political or regulatory conditions outside of PGTI’s control. All such factors are difficult to predict and are beyond our control, including those detailed in PGTI’s annual reports on Form 10-K, quarterly reports on Form 10-Q and Current Reports on Form 8-K that are available on PGTI’s website at https://pgtinnovations.com and on the website of the Securities Exchange Commission (“SEC”) at http://www.sec.gov. PGTI’s forward-looking statements are based on assumptions that PGTI’s believes to be reasonable but that may not prove to be accurate. Other unpredictable or factors not discussed in this communication could also have material adverse effects on forward-looking statements. PGTI does not assume an obligation to update any forward-looking statements, except as required by applicable law. These forward-looking statements speak only as of the date hereof.
Additional Information and Where to Find It
In connection with the Transaction, PGTI will file with the SEC a proxy statement on Schedule 14A. The definitive proxy statement will be sent to the stockholders of PGTI seeking their approval of the Transaction and other related matters.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY STATEMENT ON SCHEDULE 14A WHEN IT BECOMES AVAILABLE, AS WELL AS ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE TRANSACTION OR INCORPORATED BY REFERENCE INTO THE PROXY STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION REGARDING PGTI, THE TRANSACTION AND RELATED MATTERS.
Investors and security holders may obtain free copies of these documents, including the proxy statement, and other documents filed with the SEC by PGTI through the website maintained by the SEC at http://www.sec.gov. Copies of documents filed with the SEC by PGTI will be made available free of charge by accessing PGTI’s website at https://pgtinnovations.com or by contacting PGTI by submitting a message at https://ir.pgtinnovations.com/investor-contact or by mail at 1070 Technology Drive,
Participants in the Solicitation
PGTI, its directors, executive officers and other persons related to PGTI may be deemed to be participants in the solicitation of proxies from PGTI’s stockholders in connection with the Transaction. Information about the directors and executive officers of PGTI and their ownership of PGTI common stock is also set forth in PGTI’s definitive proxy statement in connection with its 2023 Annual Meeting of Stockholders, as filed with the SEC on April 10, 2023 (and which is available at https://www.sec.gov/Archives/edgar/data/1354327/000119312523126009/d442491ddef14a.htm), PGTI’s Current Report on Form 8-K filed with the SEC on July 3, 2023 (and which is available at https://www.sec.gov/Archives/edgar/data/1354327/000095010323009816/dp196528_8k.htm), PGTI’s Current Report on Form 8-K filed with the SEC on August 8, 2023 (and is available at https://www.sec.gov/Archives/edgar/data/1354327/000095010323011731/dp198129_8k.htm), PGTI’s Current Report on Form 8-K filed with the SEC on November 6, 2023 (and is available at https://www.sec.gov/Archives/edgar/data/1354327/000095010323016034/dp202537_8k.htm), and PGTI’s Current Report on Form 8-K filed with the SEC on January 2, 2024 (and is available at https://www.sec.gov/Archives/edgar/data/1354327/000095010324000038/dp204648_8k.htm). Information about the directors and executive officers of PGTI, their ownership of PGTI common stock, and PGTI’s transactions with related persons is set forth in the sections entitled “Directors, Executive Officers and Corporate Governance,” “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” and “Certain Relationships and Related Transactions, and Director Independence” included in PGTI’s annual report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on February 27, 2023 (and which is available at https://www.sec.gov/Archives/edgar/data/1354327/000095017023004543/pgti-20221231.htm), and in the sections entitled “Board Highlights” and “Security Ownership of Certain Beneficial Owners and Management” included in PGTI’s definitive proxy statement in connection with its 2023 Annual Meeting of Stockholders, as filed with the SEC on April 28, 2023 (and which is available at https://www.sec.gov/Archives/edgar/data/1354327/000119312523126009/d442491ddef14a.htm). Additional information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the proxy statement and other relevant materials to be filed with the SEC in connection with the proposed transaction when they become available. Free copies of these documents may be obtained as described in the preceding paragraph.
No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or the solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
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For MITER Brands:
Ira Gorsky / Patrick Ryan
miterbrands@edelmansmithfield.com
917.275.7327
For PGT Innovations:
Investors:
Craig Henderson
Chief Financial Officer
CHenderson@PGTInnovations.com
941.480.1600
Media:
Stephanie Cz
Corporate Communications and PR Manager
SCz@PGTInnovations.com
941.480.1600
FGS Global
PGTI@fgsglobal.com
212.687.8080
Source: PGT Innovations
FAQ
What is the proposed acquisition price of PGTI shares by MITER Brands?
What percentage premium does the proposed acquisition price represent?
Who is financing part of the acquisition?
When is the acquisition expected to close?
What are the conditions for the acquisition to be completed?
