MasterBrand Inc. has announced its acquisition of Supreme Cabinetry Brands, Inc. for $520 million in cash. This represents a multiple of approximately 8.9x Supreme's adjusted EBITDA for the twelve months ending March 31, 2024, inclusive of $25 million net present value of cash tax attributes being acquired in the transaction. With anticipated annual run-rate cost synergies of $28 million, the purchase price multiple of adjusted EBITDA is expected to be approximately 5.9x.
The acquisition is expected to deliver annual run-rate cost synergies of $28 million by the end of year three from areas including procurement, facility optimization, and overhead expenses. In addition to the cost synergies, MasterBrand anticipates commercial synergies across the companies' complementary channels and product lines. The acquisition is expected to be accretive to adjusted diluted EPS within the first full year after closing.
MasterBrand intends to fund the transaction through cash on hand and existing credit facilities, and has also arranged an incremental debt commitment from JPMorgan Chase Bank, N.A. to ensure ample liquidity to support its ongoing capital allocation priorities. The company anticipates its pro forma net debt to adjusted EBITDA will be approximately 2.4 – 2.6x as of the expected closing date of the transaction.
The acquisition is subject to customary closing conditions, including antitrust clearance in the United States, and is expected to be completed during the third quarter of 2024. Rothschild & Co is acting as MasterBrand’s exclusive financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP is acting as MasterBrand’s legal counsel on the transaction.
MasterBrand, Inc. is the largest manufacturer of residential cabinets in North America and offers a comprehensive portfolio of leading residential cabinetry products for the kitchen, bathroom, and other parts of the home. The company's products are available in a wide variety of designs, finishes, and styles, and span the most attractive categories of the cabinets market: stock, semi-custom, and premium cabinetry. Additionally, the company employs over 12,000 associates across more than 20 manufacturing facilities and offices.
Supreme Cabinetry Brands, Inc. is one of the largest manufacturers of residential cabinetry in America, with manufacturing facilities located in Minnesota, Iowa, and North Carolina. The company, with its two iconic brands, Dura Supreme and Bertch Cabinetry, crafts framed and frameless cabinetry for a nationwide network of dealers. Today the company's shares have moved -0.1% to a price of $16.24. Check out the company's full 8-K submission here.
