Home sales are on the rise, which is building up demand for construction product suppliers. According to the Department of Commerce, new U.S. home sales climbed to 495,000 units in October 2015 from 447,000 in September. Both strategic buyers and private equity firms have been going after construction targets.
Recently, middle-market PE firm Wynnchurch Capital said it will invest in privately-held Gypsum Technologies Inc. The target makes machines and tools that are used to install wallboards. Wynnchurch partner Frank Hayes says, “the near- and long- term fundamentals are quite attractive” in the building products industry.
In other PE-backed deals, Advent International-backed Morsco is buying plumbing products distributor Murray Supply Co., and High Road Capital Partners is purchasing floor maker Cali Bamboo LLC.
Strategic buyers have been active in the construction space as well. For instance, Quanex (NYSE: NX) is paying $248 million for cabinet maker Woodcraft Industries, and Summit Materials Inc. (NYSE: SUM) is adding gravel-pit operator LeGrand Johnson Construction Co. Door manufacturer Masonite International Corp. (NYSE: DOOR) completed its $13 million purchase of privately-held USA Wood Door and also bought door-kit maker National Hickman for $82 million.
With signs pointing to a continued housing recovery in 2016, building products M&A is poised to stay strong. For more, see Growth in Construction Sector Spurs M&A in Building Products.