Recent Successful Sales of Plaskolite and
Nudo Highlight Growing Attractiveness
of Specialty Materials for Building
Products Applications
Amid an ongoing recovery in construction activity,
companies offering products or materials in the building
products sector are generating strong interest from
strategic acquirers and financial investors.
Industry Commentary
North America
Elliot Farkas
+1 312 364 8157
efarkas@williamblair.com
Samuel Tinaglia
+1 312 364 8086
stinaglia@williamblair.com
Patrick Nally
+1 312 364 8634
pnally@williamblair.com
Europe
Matthew Zimmer
+44 207 868 4502
mzimmer@williamblair.com
Dirk Felsmann
+49 69 509527 614
dfelsmann@williamblair.com
The continued recovery of the
construction industry has served as a
tailwind for growth of manufacturers
and distributors of building products.
This growth has been particularly
strong for composites and other
specialty materials that offer greater
value from superior performance
attributes and lower total
lifecycle costs.
As a result, companies offering these
differentiated building products
are generating widespread interest
from strategic acquirers and
financial sponsors alike. William
Blair has recently completed two
transactions that illustrate this trend,
advising Plaskolite, Inc. on its sale
to Charlesbank Capital Partners and
Nudo Products, Inc. (NPI) on its sale to
Grupo Verzatec, the parent company
of Glasteel and Stabilit America. Since
2012, William Blair has completed 26
transactions in the building products
and specialty materials sectors.
In this article, we examine trends
driving growth of the specialty
materials and building products
industries and the characteristics of
companies in those industries that are
receiving premium valuations. We also
provide an overview of the Plaskolite
and NPI transactions and identify
the value drivers within these
specific transactions.
Overview of Specialty Building
Products
Specialty building products
companies provide composites or
other specialty materials that offer
superior performance, strength,
and/or durability, resulting in an
improved value proposition over
the product’s entire lifecycle. Often
through proprietary material science,
production technologies or services,
these companies offer products that
provide benefits to builders and
contractors such as easier installation,
reduced maintenance, improved
weather resistance, or enhanced
color retention.
Because of these differentiated,
valuable attributes and the associated
superior market position, specialty
building products companies have
significantly outperformed companies
selling general or commodity
building products over the past
decade and have superior financial
profiles, making them more attractive
investments for both strategic
acquirers and financial sponsors.
During the recession, specialty
building products companies
experienced a more moderate decline
and a quicker, stronger recovery
than general or commodity building
products companies. Since 2005, stock
prices for publicly traded specialty
building products manufacturers are
up 135%, compared with 35% for
manufacturers of general building
products. We typically see specialty
building products companies with
longer-term revenue growth of 10%plus and consistent profitability in
excess of approximately 15%
EBITDA margins.
Tailwinds for Growth
The construction industry is in
the midst of an ongoing postrecession recovery. Residential and
nonresidential construction activity
is trending up, yet remains well
below pre-recession peaks. Activity
in both segments is expected to see
continued growth through 2019.
With the housing market leading
the way, the construction industry
appears to provide more attractive
growth prospects than the broader
U.S. economy. The Commerce
Department reported that housing
starts in November jumped to 1.17
million units. This marked the eighth
consecutive month of more than 1
million housing starts, the longest
stretch since 2007.
In addition, President Obama’s signing
of a five-year, $305 billion highway bill
in December 2015 provides a positive
backdrop for infrastructure spending.
The law, which is the first long-term
national transportation spending deal
in a decade, calls for $205 billion of
spending on highway projects and $48
billion of spending on transit projects.
Specialty Building Products Equities Outperform General Building
Products and Broader Market
As demand for composites and other specialty building products has steadily
increased over the past decade, stock prices of manufacturers of specialty
products have significantly outperformed general (non-specialty) product
manufacturers and the broader equity market.
250
134.8%
200
68.7%
150
34.6%
100
50
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
General
Specialty
S&P 500
Source: Public filings, FactSet, and Capital IQ as of Dec. 31, 2015. Specialty manufacturers index
comprises: Acuity Brands, Apogee Enterprises, Headwaters, James Hardie, PGT Industries, Simpson
Manufacturing Company, and Trex. General manufacturers index comprises: American Woodmark,
Armstrong, Fortune Brands Home & Security, Gibraltar Industries, Griffon Industries, Lennox
International, Masco, Owens Corning, Ply Gem, Nortek, Quanex Building Products, Saint-Gobain,
and USG.
Value Drivers in Specialty Building
Products M&A
Within the increasingly attractive
specialty building products industry,
companies that are able to command
premium valuations often have several
of the following characteristics:
• Differentiated product properties
and brands
• Materials science capabilities
• Scale advantages
• Advanced, unique manufacturing
capabilities
• Entrenched, leading market
positions
• Organic and/or inorganic growth
opportunities
• Price leader/pass-through ability
• Superior purchasing ability
• Top management teams
Plaskolite and Nudo Acquisitions
Highlight Increased Interest
in Premium, Leading Specialty
Building Products Assets
As a result of the growing market
opportunity for specialty building
products and the relatively strong
financial performance of these
companies, strategic acquirers
and financial sponsors have been
aggressively pursuing acquisition
opportunities of this nature. In late
2015, William Blair completed highly
successful sale processes for Plaskolite
and NPI.
Plaskolite Acquired by Charlesbank
Capital Partners
Not Disclosed
has been acquired by
November 2015
William Blair advised Plaskolite
in connection with the company
receiving a controlling investment
U.S. Housing Starts (000s of units)
Housing starts in November jumped to 1.17 million units. This marked the
eighth consecutive month of more than 1 million housing starts, the longest
stretch since 2007. Residential activity typically serves as a leading indicator
of nonresidential activity.
2,500
1,500
1,000
500
0
1995
2000
2005
2010
Based in Columbus, Ohio, Plaskolite
is one of North America’s largest
manufacturers of rigid plastic sheet,
with the No. 1 market position in
most of its core product categories.
The company manufactures and sells
a broad range of value added ABS,
acrylic, polycarbonate, PETG, and
polystyrene sheet, along with related
sheet coatings and specialty polymers.
Plaskolite has world-class, highly
automated manufacturing capabilities
that enable nimble and safe, run-tosize production. Charlesbank Capital
Partners is a private equity firm
focused on a broad array of industries,
including manufacturing, distribution,
media and communications, financial
services, energy, healthcare products
and services, and consumer products.
The transaction provides Plaskolite
additional growth capital and financial
expertise needed to pursue larger
and more international acquisitions,
as well as accelerate organic
growth initiatives. The acquisition
also provided diversification for
Plaskolite’s family owners.
2,000
1990
from Charlesbank Capital Partners.
The transaction closed on
November 3, 2015.
Nudo Acquired by Grupo Verzatec
2015
Source: Federal Reserve Bank of St. Louis
Not Disclosed
Nonresidential Construction Confidence Index
The index reflects U.S. construction contractors’ perceptions of the business
environment over a six-month period, in addition to the prospects for
commercial and industrial construction spending growth. Any number
above 50 represents a favorable outlook.
®
has been acquired by
December 2015
75
70
65
60
55
50
2012
1H
2012
2H
2013
1H
Sales
Source: Associated Builders and Contractors
2013
2H
2014
1H
Profit Margins
2014
2H
2015
1H
William Blair advised NPI on its
December 2015 sale to Grupo
Verzatec. NPI was a portfolio company
of RFE Investment Partners. Grupo
Verzatec, a Mexico-based strategic
acquirer, is the parent company of
Stabilit America and Glasteel.
Based in Springfield, Illinois, NPI
is a leading provider of composite
panel solutions primarily for building
products applications. NPI’s Marlite
brand provides innovative composite
sheet and laminated interior panel
solutions for commercial markets and
is one of the most widely specified
decorative wall panel brands. Nudo
and Prime Panels provide sheet
and laminated functional panels
for the building products, signage,
transportation, and other commercial
markets; the brands are among
the largest laminators in the
United States. Based in Monterrey,
Mexico, Grupo Verzatec is one
of the largest producers of highquality fiberglass reinforced plastic
(FRP), polyvinyl chloride (PVC),
and polycarbonate panels used
in the building construction and
transportation industries.
The acquisition of NPI is highly
strategic for Grupo Verzatec.
The transaction provides Grupo
Verzatec the opportunity to vertically
integrate key aspects of its operations
and expand its geographic footprint
in the United States. The transaction
also broadens Grupo Verzatec’s
manufacturing capabilities in the
decorative and specialty wall panels
space and places the company closer
to its end-customers by gaining access
to Nudo’s extensive architectural
specification and distribution network.
William Blair’s Leading Building
Products and Specialty Materials
Franchises
Through ongoing dialogue with
strategic acquirers and extensive
relationships with the most active
financial sponsors in the industry,
William Blair has developed deep
sector expertise in building products
and specialty materials. Our
understanding of industry trends and
buyers’ strategic and financial road
maps has allowed us to conduct highly
competitive sale processes on behalf
of our clients. Since 2014, we have
completed 13 M&A transactions in
the building products and specialty
materials industries.
To learn more about trends shaping
the deal-making landscape in building
products and specialty materials,
please do not hesitate to contact us.
Selected Building Products and Specialty Materials Transactions
Not Disclosed
Not Disclosed
Not Disclosed
has been acquired by
has been acquired by
has been acquired by
December 2015
December 2015
November 2015
Not Disclosed
$225,000,000
$110,000,000
has been acquired by
has divested its
Asian Operations and
Brand Name to
has been acquired by
October 2015
April 2015
February 2015
Not Disclosed
$400,000,000
Not Disclosed
has been acquired by
has been acquired by
has been acquired by
July 2014
April 2014
November 2014
®
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