TopBuild to acquire United Subcontractors for $475M in cash
TopBuild (BLD) has entered into an agreement to acquire United Subcontractors in an all-cash transaction valued at $475M.
The company expects to finance the acquisition using a combination of debt financing and cash on hand.USI is a leading provider of insulation installation and distribution services to the residential and commercial construction markets, generating pro forma annual revenue of approximately $375M in 2017 and an adjusted EBITDA margin of 12.5%.
It has a diversified product and service offering including fiberglass, spray foam and window and glass installation.
Founded in 1998 and headquartered in St. Paul, Minnesota, USI has 38 locations in 14 states, including high growth regions in the Pacific Northwest, Mountain West, Southwest and Southeast.
TopBuild expects to achieve cost savings of $15M, with approximately $5M-$10M expected in the first full year after closing and the full run-rate by the end of year two after closing.
On a December 31, 2017 pro forma basis, inclusive of expected run rate synergies of $15 million, the combined company had revenue of $2.3 billion, adjusted EBITDA of $259 million, almost 10,000 employees and close to 300 installation and distribution locations.
The Company plans to fund this transaction using proceeds from a $350 million bond issuance, $100 million from a delayed draw term loan commitment currently available under its existing secured credit facility and $25 million from cash on hand or drawings under its revolving credit facility.
In the event the bond market terms are not attractive to the Company at the time of execution, the Company would expect to finance the transaction with secured bank debt.
At the close of the transaction, the Company’s net debt to pro forma adjusted EBITDA implies a multiple of 2.9 times pre-synergies, or 2.8 times post-synergies.
The transaction, which has been approved by TopBuild’s Board of Directors, is subject to customary closing conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
The Company expects the transaction to close in the second quarter of 2018.
TopBuild Corp. engages in the installation, distribution, and sale of insulation and other building products to the United States construction industry. The company operates in two segments, Installation and Distribution.
BLD closed at $68.00.
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