PGT Innovations, Inc. (NYSE: PGTI) (“PGTI” or the “Company”), a
national leader in premium windows and doors, today announced that
its Board of Directors has unanimously determined that, while the
unsolicited proposal from Miter Brands to acquire all outstanding
shares of PGTI common stock for $41.50 per share in cash is not
superior to PGTI’s definitive agreement to be acquired by Masonite
International Corp (NYSE: DOOR) (“Masonite”), depending on the
outcome of future negotiations, Miter’s proposal would reasonably
be expected to lead to a superior proposal if Miter is able to
improve several aspects of its proposed transaction.
As announced on December 18, 2023, PGTI entered into a
definitive agreement to be acquired by Masonite for $41.00 per
share, comprised of $33.50 in cash and 0.07353 shares of Masonite
common stock,1 representing a premium of approximately 56.5% over
the closing price of PGTI common stock of $26.20 per share on
October 9, 2023.2
“While the PGTI Board of Directors believes the transaction with
Masonite remains the best option to maximize value for our
stockholders, the improved consideration and near-term value
certainty in a potential all-cash transaction with Miter is worth
exploring if Miter is able to adequately resolve several issues
with its proposal,” said Jeffrey T. Jackson, President and Chief
Executive Officer.
Topics PGTI Seeks to Address in
Discussions with Miter
- More value for PGTI stockholders:
- Miter’s latest proposal provides an increase of only 1.2% in
transaction consideration relative to the definitive agreement with
Masonite as of December 15, 2023, and only a 4.5% increase relative
to the Masonite transaction as of January 5, 2024;
- The modest increase in transaction consideration in Miter’s
proposal compares unfavorably to the more substantial average
increase in consideration provided in typical topping bids;
and
- Further, the latest proposal would require PGTI stockholders to
give up the considerable value upside potential in combining with
Masonite to create a leading door and window solutions company with
over $4 billion in revenue, $800 million of EBITDA, robust free
cash flow generation, a rapid deleveraging profile, and ~$100
million in annual synergies from the proposed transaction.
- Stronger contractual protections to increase closing
certainty:
- Miter’s proposal presents additional closing risks as compared
to the pending transaction with Masonite that renders the small
incremental transaction consideration insufficient to compensate
PGTI stockholders for such risk;
- Additional contractual protections are required to ensure any
proposed transaction with Miter will actually be consummated and
deliver superior value to PGTI stockholders; and
- Miter’s proposal would require PGTI to pay an up-front
termination fee of $84 million to Masonite – more than 2.5 times
the value of the additional consideration in Miter’s proposal3 –
that would not be reimbursed if a transaction with Miter fails to
close. Unlike most other topping bids, Miter has failed to offer to
pay this fee on PGTI’s behalf which does not reflect the customary
confidence of an interloper regarding the certainty of its proposed
transaction closing.
Mr. Jackson concluded, “To be clear, we have not concluded that
the proposed Miter transaction is superior to our binding
transaction with Masonite, and we are not committed to a
transaction with Miter. There are several key terms that would need
to be negotiated satisfactorily before we would be in a position to
recommend a Miter transaction over the Masonite transaction.
Rather, we are planning to engage in discussions with Miter since
we believe there is a reasonable basis for concluding that it would
result in a superior proposal for PGTI stockholders.”
A summary of the steps PGTI and its Board of Directors have
taken to maximize value for our stockholders, including in its
negotiations with Miter, is included below.
Next Steps
The PGTI Board’s determination that the Miter proposal would
reasonably be expected to lead to a superior proposal allows the
two companies to negotiate improved terms of a binding acquisition
proposal by Miter. If PGTI and Miter are able to negotiate a
transaction on terms that the PGTI Board concludes is a superior
proposal, Masonite would have the option, over a period of four
business days, to offer to improve the terms of its existing merger
agreement with PGTI.
Thereafter, if the PGTI Board determines that Miter’s offer is a
superior proposal, after taking into consideration any improved
terms offered by Masonite, only then would PGTI enter into an
agreement with Miter and would there be an obligation to pay
Masonite the termination fee. Until that time, the definitive
agreement with Masonite remains binding and in full effect, and the
PGTI Board reaffirms its existing recommendation of the transaction
with Masonite.
Evercore is acting as exclusive financial advisor to PGTI, and
Davis Polk & Wardwell LLP is acting as legal counsel to
PGTI.
PGT Innovations Is
Committed to Maximizing Stockholder Value
Transaction Process
Masonite Transaction
Statistics
12Counterparties
Engaged
16Proposals Received
$3.0BDeal
value4
$41.00Per
Share4
~56%Premium to Undisturbed
Share Price4,5
11.1xDeal Value / LTM
EBITDA4
PGTI’s Board Engaged with Miter and Many
Other Potential Buyers to Maximize Value for PGTI
Stockholders
- Over the past several months, we have engaged with 12
different potential strategic and financial counterparties,
including Miter.
- We received a total of 15 proposals with
ever-increasing deal values, which culminated in the definitive
agreement with Masonite for $41.00 per share. The 16th
proposal we received was submitted by Miter on January 2,
2024.
- In March 2023, we learned that Miter had accumulated
a ~10% position in PGTI through common stock and derivatives
– without paying a premium to PGTI’s stockholders.
- We engaged in negotiations with Miter and received a
total of 7 proposals from them (prior to their most recent
proposal):
- Their initial proposal in April 2023 was for $29.00
per share, and they subsequently made multiple proposals
with incrementally higher prices;
- We also entered into a confidentiality agreement with Miter and
provided them with detailed due diligence.
- On November 13, 2023, Miter delivered a proposal of
$38.25 per share they characterized as its
“best and final offer.”
- We informed Miter’s management team that we were prepared to do
a deal with Miter above their proposal, and Miter told us that as
stockholders of PGTI that if PGTI received an offer for $40.00 per
share we “should take it.”
- Shortly thereafter, Masonite offered $40 per share, but
conditioned their willingness to proceed on us entering into
exclusivity which we did in reliance on Miter’s statements that
their offer was its “best and final” and we “should take [a deal at
$40 per share].”
- On December 14, 2023, Miter unexpectedly delivered another
proposal for $39.00 per share.
- On December 18, 2023, PGTI announced a deal with Masonite for
$41.00 per share.4
Recent Events
- On January 2, 2024, Miter submitted a new proposal of
$41.50 per share for the ~90% PGTI shares they don’t own.
- The PGTI Board continues to be open to all paths to
deliver maximum value to PGTI stockholders – and has concluded
that the Miter proposal would reasonably be expected to lead to
a superior proposal, if the parties are able to reach agreement
on several improvements on price and contractual protections to
improve deal certainty.
- The PGTI Board has taken actions designed to maximize value
for PGTI stockholders – and stands ready to engage with Miter
to see if they can deliver a superior proposal.
About PGT Innovations, Inc.
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. Through its brands, PGT Innovations is
also a leading manufacturer of impact-resistant windows and doors.
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 are a preferred
choice of architects, builders, and homeowners throughout North
America and the Caribbean. Their high-quality products are
available in custom and standard sizes with massive dimensions that
allow for unlimited design possibilities in residential,
multi-family, and commercial projects. For additional information,
visit http://www.pgtinnovations.com.
Cautionary Statement Regarding Forward-Looking
Statements
This communication contains certain statements that are
“forward-looking” statements within the meaning of Section 27A of
the Securities Act of 1933 (the “1933 Act”) and Section 21E of the
Securities Exchange Act of 1934. 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 (including the Merger, as defined below) (the
“Transaction”) contemplated by the Agreement and Plan of Merger,
dated as of December 17, 2023 (the “Merger Agreement”), among PGT
Innovations, Masonite International Corporation, a British Columbia
corporation (“Masonite”), and Peach Acquisition, Inc., a Delaware
corporation and an indirect wholly-owned subsidiary of Masonite
(“Merger Sub”), pursuant to which Merger Sub will merge with and
into PGT Innovations (the “Merger”), including the expected time
period to consummate the Transaction, the anticipated benefits
(including synergies) of the Transaction and integration and
transition plans, opportunities, anticipated future performance,
expected share buyback programs and expected dividends. 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 Masonite
and PGT Innovations, 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 ability to successfully integrate
the businesses of the companies, including the risk that problems
may arise in successfully integrating the such businesses, which
may result in the combined company not operating as effectively and
efficiently as expected; the occurrence of any event, change or
other circumstances that could give rise to the termination of the
definitive agreement; the possibility that PGT Innovations’
stockholders may not approve the Transaction; the risk that the
anticipated tax treatment of the Transaction is not obtained; 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
Masonite’s or PGT Innovations’ common shares; 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 Masonite and PGT Innovations 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 unexpected future
capital expenditures; the risk of potential litigation relating to
the Transaction that could be instituted against Masonite and/or
PGT Innovations or their respective directors and/or officers; the
risk that the combined company may be unable to achieve
cost-cutting or revenue synergies or it may take longer than
expected to achieve those synergies; the risk that the combined
company may not buy back shares; 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 receipt of required Masonite Board of Directors’ authorizations
to implement capital allocation strategies; the risk of rating
agency actions and Masonite’s and PGT Innovations’ 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 Masonite’s or PGT Innovations’ control. All such factors
are difficult to predict and are beyond our control, including
those detailed in Masonite’s annual reports on Form 10-K, quarterly
reports on Form 10-Q and Current Reports on Form 8-K that are
available on Masonite’s website at https://www.masonite.com and on
the website of the SEC (“Securities Exchange Commission”) at
http://www.sec.gov, and those detailed in PGT Innovations’ annual
reports on Form 10-K, quarterly reports on Form 10-Q and Current
Reports on Form 8-K that are available on PGT Innovations’ website
at https://pgtinnovations.com and on the SEC website at
http://www.sec.gov. PGT Innovations’ forward-looking statements are
based on assumptions that PGT Innovations believes to be reasonable
but that may not prove to be accurate. Other unpredictable factors
or factors not discussed in this communication could also have
material adverse effects on forward-looking statements. Neither
Masonite nor PGT Innovations assumes 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, Masonite will file with the
SEC a registration statement on Form S-4 to register the common
shares of Masonite to be issued in connection with the Transaction.
The registration statement will include a proxy statement of PGT
Innovations that also constitutes a prospectus of Masonite. The
definitive proxy statement/prospectus will be sent to the
stockholders of PGT Innovations seeking their approval of the
Transaction and other related matters.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
REGISTRATION STATEMENT ON FORM S-4 AND THE PROXY
STATEMENT/PROSPECTUS INCLUDED WITHIN THE REGISTRATION STATEMENT ON
FORM S-4 WHEN THEY BECOME 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/PROSPECTUS,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION REGARDING MASONITE,
PGT INNOVATIONS, THE TRANSACTION AND RELATED MATTERS.
Investors and security holders may obtain free copies of these
documents, including the proxy statement/prospectus, and other
documents filed with the SEC by Masonite or PGT Innovations through
the website maintained by the SEC at http://www.sec.gov. Copies of
the documents filed with the SEC by Masonite will be made available
free of charge by accessing Masonite’s website at
https://www.masonite.com or by contacting Masonite’s Investor
Relations Department by phone at (813) 877-2726. Copies of
documents filed with the SEC by PGT Innovations will be made
available free of charge by accessing PGT Innovations’ website at
https://pgtinnovations.com or by contacting PGT Innovations by
submitting a message at
https://ir.pgtinnovations.com/investor-contact or by mail at 1070
Technology Drive, North Venice, FL 34275.
Participants in the Solicitation
Masonite, PGT Innovations, and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of PGT Innovations in
connection with the Transaction under the rules of the SEC.
Information about the interests of the directors and executive
officers of Masonite and PGT Innovations and other persons who may
be deemed to be participants in the solicitation of stockholders of
PGT Innovations in connection with the Transaction and a
description of their direct and indirect interests, by security
holdings or otherwise, will be included in the proxy
statement/prospectus related to the Transaction, which will be
filed with the SEC. Additional information about Masonite, the
directors and executive officers of Masonite and their ownership of
Masonite common shares is also set forth in the definitive proxy
statement for Masonite’s 2023 Annual Meeting of Shareholders, as
filed with the SEC on Schedule 14A on March 29, 2023 (and which is
available at
https://www.sec.gov/Archives/edgar/data/893691/000119312523083032/d326829ddef14a.htm),
and other documents subsequently filed by Masonite with the SEC.
Information about the directors and executive officers of Masonite,
their beneficial ownership of common shares of Masonite, and
Masonite’s transactions with related parties is set forth in the
sections entitled “Directors, Executive Officers and Corporate
Governance” and “Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters” included in
Masonite’s annual report on Form 10-K for the fiscal year ended
January 1, 2023, which was filed with the SEC on February 28, 2023
(and which is available at
https://www.sec.gov/Archives/edgar/data/893691/000089369123000013/door-20230101.htm),
in Masonite’s Current Report on Form 8-K filed with the SEC on May
12, 2023 (and which is available at
https://www.sec.gov//Archives/edgar/data/893691/000089369123000037/door-20230511.htm),
and in the sections entitled “Proposal 1: Election of Directors,”
“Security Ownership of Certain Beneficial Owners and Management,”
and “Certain Relationships and Related Party Transactions” included
in Masonite’s definitive proxy statement for Masonite’s 2023 Annual
Meeting of Shareholders, as filed with the SEC on Schedule 14A on
March 29, 2023 and which is available at
https://www.sec.gov/Archives/edgar/data/893691/000119312523083032/d326829ddef14a.htm).
Information about the directors and executive officers of PGT
Innovations and their ownership of PGT Innovations common stock is
also set forth in PGT Innovations’ 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),
PGT Innovations’ 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),
and PGT Innovations’ 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).
Information about the directors and executive officers of PGT
Innovations, their ownership of PGT Innovations common stock, and
PGT Innovations’ 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 PGT Innovations’ 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
PGT Innovations’ 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 interests of such participants
in the solicitation of proxies in respect of the Transaction will
be included in the registration statement and proxy
statement/prospectus and other relevant materials to be filed with
the SEC when they become available These documents can be obtained
free of charge from the SEC’s website at www.sec.gov.
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.
______________________
1 Based on the closing price of Masonite
and PGTI shares on December 15, 2023.
2 October 9, 2023, was the last trading
day of PGTI’s common stock prior to public disclosure of a proposal
to acquire PGTI.
3 Based on the transaction consideration
in the definitive agreement with Masonite as of December 15,
2023.
4 Based on the trading price of Masonite’s
stock of $102.00 on December 15, 2023.
5 Based on the trading price of PGTI’s
stock of $26.20 on October 9, 2023, the last trading day of PGTI’s
common stock prior to public disclosure of a proposal to acquire
PGTI.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240108109251/en/
Investor Relations: Craig Henderson, 941-480-1600 Chief
Financial Officer CHenderson@PGTInnovations.com
Media Relations: Stephanie Cz, 941-480-1600 Corporate
Communications and PR Manager SCz@PGTInnovations.com
FGS Global PGTI@fgsglobal.com 212-687-8080
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