AZEK Soars 37% on James Hardie Acquisition

On March 24, 2025, AZEK's stock price was $18.39 in pre-market trading.

James Hardie Industries has announced its intention to acquire AZEK, a leading manufacturer of outdoor living products, in a deal valued at $8.75 billion. This acquisition is expected to create a leading player in the building materials sector, with the combined entity generating significant revenue and adjusted EBITDA. The deal, which was unanimously approved by the boards of both companies, is set to be finalized in the second half of the year.

The acquisition values AZEK shares at $56.88 each, representing a 37% premium over the previous closing price. AZEK shareholders will receive $26.45 in cash and 1.034 James Hardie shares for each AZEK share, resulting in James Hardie and AZEK shareholders owning approximately 74% and 26% of the combined company, respectively.

Analysts have expressed concerns about the high premium and elevated multiple associated with the deal, questioning the potential for revenue synergies and the justification for the transaction. Despite these concerns, James Hardie expects to achieve at least $350 million in additional earnings and $125 million in cost savings once the deal is completed.

The acquisition comes at a time when the U.S. housing market faces challenges, including tariffs and labor shortages, which could impact demand for new building starts. However, James Hardie's CEO, Aaron Erter, believes that the consolidation in the U.S. building products industry will continue, and the acquisition of AZEK will position the combined company to navigate the changing landscape effectively.