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On Monday, Benchmark analyst Reuben Garner reaffirmed a Buy rating on Azek Co. (NYSE: AZEK) stock, with a price target of $57.00. This follows the recent announcement that James Hardie (NYSE:JHX) has acquired The Azek Company. As part of the acquisition terms, AZEK shareholders will receive $26.45 in cash and 1.0340 ordinary shares of James Hardie for each share of AZEK they hold. This deal gives each AZEK share a total value of $56.88, which is approximately a 26% premium over AZEK’s volume-weighted average price for the past 30 trading days. Currently trading at $49.02, AZEK has a market capitalization of $7.1 billion and trades at a P/E ratio of 41x. InvestingPro analysis shows the stock has been quite volatile, with additional insights available in the comprehensive Pro Research Report.
The transaction will result in James Hardie and AZEK shareholders owning roughly 74% and 26% of the merged entity, respectively. After the deal is finalized, James Hardie’s ordinary shares will be listed on the NYSE, and the company is expected to qualify for inclusion in broader U.S. indexes in the future. James Hardie will also continue to have its CDI listing and index inclusion on the ASX. According to InvestingPro data, AZEK maintains strong financial health with a current ratio of 2.56x and operates with moderate debt levels, suggesting a solid foundation for the merger.
Garner’s commentary highlighted the premium that the acquisition deal offers to AZEK shareholders, reflecting the value seen in the merger by both parties involved. The combination of the two companies is anticipated to create a stronger presence in the building materials market, with potential for increased shareholder value. AZEK has demonstrated solid performance with a revenue growth of 6.6% and a gross profit margin of 37.3% in the last twelve months. Get deeper insights into AZEK’s valuation metrics and growth potential with InvestingPro’s exclusive research tools and comprehensive analysis.
The strategic acquisition is a significant step for James Hardie, as it not only expands its product portfolio but also strengthens its market position. The listing of its shares on the NYSE and the potential for future index inclusion represent additional benefits that could enhance the company’s visibility and liquidity in the global markets.
The transaction is yet to be completed, and further details regarding the finalization and integration process will be monitored by investors and industry observers. The agreed terms between James Hardie and AZEK set a clear financial framework for the acquisition, with the market now awaiting the closing of the deal and the subsequent performance of the combined company.
In other recent news, Azek Co. announced its acquisition by James Hardie Industries in a deal valued at approximately $8.75 billion, involving a combination of cash and stock. This acquisition values Azek at $56.88 per share, a 37% premium based on recent stock prices, and is expected to enhance James Hardie’s presence in the U.S. market. BMO Capital Markets responded by raising Azek’s stock price target to $57, maintaining a Market Perform rating, while Truist Securities reaffirmed its Buy rating with a $61 price target. Meanwhile, Baird downgraded Azek’s stock from Outperform to Neutral, citing the timing of the deal and a fair valuation against the economic backdrop.
In a related development, Azek’s shareholders approved significant corporate governance changes, including amendments to its certificate of incorporation and the re-election of eight directors. The company also ratified the appointment of PricewaterhouseCoopers LLP as its independent auditor for the fiscal year ending September 30, 2025. However, a proposed amendment to remove certain business combination restrictions did not pass. These developments underscore Azek’s strategic adjustments amid its acquisition by James Hardie Industries.
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