Royal Group Technologies Limited has signed an Asset Purchase Agreement to acquire the assets and business of Marley Mouldings LLC.
Marley is the largest US manufacturer and marketer of mouldings and millwork made from polyvinlychloride and polystyrene using cellular/foam extrusion. Its sales for the twelve months ended September 30th, 2001 were approximately USD 100 million. Its products include window and door components, decorative interior trim, garage door trim, and interior shutter components.
Headquartered in Marion, VA, Marley serves both the new home construction and remodelling sectors of the building products industry, primarily in the US. Marley sells to do-it-yourself (DIY) customers via Big Box home centres, to new residential contractors via building products distributors, and to fabricators of windows, doors and interior shutters.
Marley’s management estimates that, directly or indirectly, slightly less than half of its products are ultimately sold through the DIY channel.
The purchase, subject to regulatory approval, is expected to close November 30th, 2001 for a price of USD 88 million, based on the net tangible assets having a value of USD 60 million. The acquisition is expected to be immediately accretive, before the implementation of synergies.
The cash purchase price will be paid using Royal’s existing bank line of credit. The line is currently drawn to about CAD 400 million (including commercial paper outstanding) on an approved credit facility of CAD 700 million.
The line of credit remains sufficient to meet Royal’s ongoing requirements, and management of Royal expects, after giving effect to this transaction, its ratio of debt to total capitalisation to be in the range of 36-38% at September 30th, 2002.