HOUSTON, April 22, 2024 (GLOBE NEWSWIRE) — Quanex Building Products Corporation (NYSE:NX) today announced it has reached agreement with Tyman plc (LSE:TYMN) on the terms of a recommended cash and share offer, under which Quanex will acquire the entire issued and to be issued share capital of Tyman for approximately $1.1 billion1 in enterprise value.
Quanex’s Acquisition of Tyman creates a comprehensive solutions provider in the building products industry, which on a pro forma basis generated approximately $2 billion of revenue in the fiscal year ended October 31, 20232. Tyman’s family of brands includes highly regarded names that boast wide customer bases and offer product solutions in the window and door hardware, commercial access solutions, and seals and extrusions vertical segments for residential and commercial users across its North America, UK and Ireland, and International divisions. Together, the combined company will have global scale and leading positions across an enhanced offering of differentiated engineered components.
“This transformative acquisition accelerates our journey to becoming ‘BIGGER’, creating a leading supplier of building products with a more diverse geographic footprint, product offering and customer base,” said George Wilson, Chairman, President and Chief Executive Officer of Quanex. “With significantly enhanced scale, we are looking forward to fully optimizing our portfolio of products and assets to position Quanex as a comprehensive solutions provider for our customers. Importantly, we expect employees of both companies to also benefit from increased opportunities as part of a larger organization with expanded engineering, design and manufacturing capabilities.”
“As one company, we will have an enhanced financial profile grounded in attractive margins, strong free cash flow and a healthy balance sheet, that will enable us to invest in organic and inorganic growth opportunities to deliver superior returns for investors. The industrial logic and strategic rationale of bringing Quanex and Tyman together are clear and compelling, and we are confident in our ability to drive meaningful value creation for both Quanex and Tyman shareholders and enhanced market offerings for our customer base,” Wilson concluded.
Nicky Hartery, Tyman Chairman, stated in the formal 2.7 announcement released this morning, “This transformative and complementary transaction will strengthen the enlarged business for the benefit of all our customers, employees and other stakeholders. In the context of a rapidly evolving North American marketplace, our Board ultimately determined that this transaction is the best path to maximizing value for Tyman Shareholders, who will be able to realize a meaningful portion of their holding in cash at a significant premium to the prevailing share price while also participating in the future upside of the enlarged group3. Today marks the beginning of an exciting next chapter for Tyman and our talented employees, and we look forward to joining with Quanex to deliver future growth and success.”
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1 Value assumes GBP:USD exchange rate of 1.2373 as of April 19, 2024.
2 Based on FY 2023A financial figures using October 31, 2023 year end for Quanex and December 31, 2023 year end for Tyman. Assumes GBP:USD exchange rate of 1.2439 for 2023.
3 Enlarged Group means the enlarged group following completion of the Acquisition, comprising Quanex and Tyman.
Compelling Industrial Logic and Strategic Rationale for the Acquisition
- Aligns with Quanex’s “BIGGER” Strategic Roadmap for Growth and Value Creation. This transaction matches Quanex’s bold acquisition strategy, and provides exposure to an enhanced product offering and additional markets, moving Quanex closer to its $2 billion revenue target.
- Creates a Larger, More Diversified Supplier of Components to OEMs. Quanex and Tyman have complementary product portfolios of trusted brands, routes to market and manufacturing processes, as well as highly complementary customer bases.
- Strengthens Brand Leadership. Tyman’s family of brands includes highly-regarded names in their respective business segments, which boast wide customer bases. These brands offer product solutions in the window and door hardware, commercial access solutions and seals and extrusions verticals.
- Enhances Financial Profile by Accelerating Growth and Increasing Profitability. The combined company will benefit from larger scale, higher profitability and stronger cash flow, positioning it well to pursue organic and inorganic growth opportunities.
- Enhanced Scale and Attractive Margins. The combined company achieves greater scale and reach with combined fiscal year 2023 revenues of approximately $2 billion and higher EBITDA margin pro forma for full cost synergies4.
- Earnings Accretive. The Acquisition is expected to be meaningfully accretive to earnings in the first full fiscal year following the completion of the Acquisition, taking into account cost synergies.
- Strong Cash Flows and Opportunity to Invest in Growth. The increased scale is expected to result in a healthy balance sheet, strong liquidity and an improved cash flow profile.
- Prudent Financing Structure. The combined company is expected to maintain modest net leverage upon completion of the Acquisition, and expects to achieve net leverage of approximately 1.5x in the medium-term following completion of the Acquisition.
- Substantial Value Creation Unlocked for both Tyman and Quanex Shareholders Through Material Synergy Opportunity. The Acquisition will result in significant recurring pre-tax cost synergies of approximately $30 million on an annual run-rate basis which are expected to be achieved within two years after transaction close.
- Additional Revenue Synergy Potential. There are several potential revenue opportunities expected for the combined company, including additional revenue growth through capitalizing on the cross-selling opportunities that will arise from Quanex’s and Tyman’s complementary customer base and the optimization of Tyman’s customer mix.5
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4 Based on FY 2023A financial figures using October 31, 2023 year end for Quanex and December 31, 2023 year end for Tyman. Assumes GBP:USD exchange rate of 1.2439 for 2023 including approximately $30M of run-rate cost synergies.
5 Although the Quanex Directors are confident of realizing value via the delivery of revenue synergies, these have not been quantified for public reporting under the Takeover Code at this stage.
Transaction Details
Under the terms of the Acquisition, Tyman shareholders will be entitled to receive an implied value of 400.0 pence for each Tyman share (the “Consideration”), based on Quanex’s last closing share price of $34.64 on April 19, 2024. Tyman shareholders will have the option to elect to receive the Consideration as either a mix of 240.0 pence in cash and 0.05715 shares of Quanex common stock for each Tyman share, or as a Capped All-Share alternative of 0.14288 shares of Quanex common stock per Tyman share. The Capped All-Share alternative will be subject to proration if more than 25% of the outstanding Tyman shares elect to receive this alternative. Upon close of the Acquisition, Tyman shareholders will own between approximately 30% and 32% of Quanex, depending on shareholder elections, on a fully diluted basis.
Based on Quanex’s last closing share price of $34.64 on April 19, 2024, the Consideration represents:
- A premium of approximately 35.1% to the closing price of the Tyman shares of 296.0 pence on the London Stock Exchange on April 19, 2024;
- A premium of approximately 36.0% to the one-month volume weighted average price of 294.2 pence per Tyman Share; and
- A premium of approximately 40.5% to the six-month volume weighted average price of 284.8 pence per Tyman Share.
Tyman shareholders will also be entitled to receive the final dividend of 9.5 pence per Tyman share, as declared by Tyman on March 7, 2024.
The Acquisition is not subject to any financing contingency, with Quanex having attained fully committed financing from Wells Fargo Bank, N.A., Bank of America Securities and TD Bank.
The full terms and conditions of the Acquisition are set out in a joint announcement released by Quanex and Tyman in the UK today under Rule 2.7 of the Takeover Code. A copy of such announcement will be available on the Quanex website at https://www.roadto2b.com, subject to certain access restrictions.
Timing and Approvals
The Acquisition has been unanimously approved by the Boards of Directors of both Quanex and Tyman and is currently expected to close in the second half of calendar year 2024, subject to the satisfaction of customary closing conditions, including shareholder approval from both Tyman and Quanex shareholders and regulatory approvals.
Irrevocable undertaking from Teleios
Teleios, which owns approximately 16.4% of the outstanding shares of Tyman, has entered into an irrevocable undertaking to vote in favor of the Acquisition at the Tyman shareholder meetings and to elect for the Capped All-Share Alternative.
Headquarters and Leadership
Following closing of the Acquisition, the combined company’s headquarters will be located at Quanex’s current head office in Houston, Texas. Quanex currently does not intend to close any of Tyman’s manufacturing facilities as a result of the Acquisition.
The combined company will be led by Mr. Wilson and the Quanex executive team.
Advisors
UBS Investment Bank is serving as sole financial advisor to Quanex. Foley & Lardner LLP and Travers Smith LLP are serving as legal advisors to Quanex.
About Quanex, A Part of Something BiggerSM
Quanex (NYSE:NX) is a global manufacturer with core capabilities and broad applications across various end markets. The Company currently collaborates and partners with leading OEMs to provide innovative solutions in the window, door, vinyl fencing, solar, refrigeration and cabinetry markets. Looking ahead, Quanex plans to leverage its material science expertise and process engineering to expand into adjacent markets. Learn more at http://www.quanex.com.
About Tyman
Tyman is a leading international supplier of engineered fenestration components and access solutions to the construction industry. The Group designs and manufactures products that enhance the comfort, sustainability, security, safety and aesthetics of residential homes and commercial buildings. Tyman’s portfolio of leading brands serve their markets through three regional divisions (North America, UK and Ireland and Europe) and cover all aspects of the hardware and sealing solutions required for doors and windows, and a full suite of solutions for roof, wall and floor access in residential and commercial buildings.
