MasterBrand to acquire American Woodmark in all-stock merger

BEACHWOOD, Ohio - MasterBrand, Inc. (NYSE:MBC) and American Woodmark Corporation (NASDAQ:AMWD) announced Wednesday they have entered into a definitive agreement for an all-stock merger that would create North America’s largest cabinet manufacturer with a combined equity value of $2.4 billion. American Woodmark, currently trading at $54.32 with a market capitalization of $788 million, appears undervalued according to InvestingPro analysis.

Under the terms of the agreement, American Woodmark shareholders will receive 5.150 shares of MasterBrand common stock for each share they own. Following the transaction, MasterBrand and American Woodmark shareholders will own approximately 63% and 37% of the combined company, respectively. InvestingPro data shows American Woodmark maintains strong financial health with a current ratio of 1.99 and liquid assets exceeding short-term obligations.

The merger aims to create a comprehensive portfolio of cabinet brands across various price points. The companies project achieving approximately $90 million in annual cost synergies by the end of the third year following the close, with the transaction expected to be accretive to MasterBrand’s adjusted diluted earnings per share in the second year. American Woodmark brings solid profitability to the merger, with a gross profit margin of 17.9% and return on equity of 11% over the last twelve months. Get deeper insights into both companies’ financial metrics with a InvestingPro subscription, which includes comprehensive Pro Research Reports for over 1,400 US stocks.

"Bringing together MasterBrand and American Woodmark will be a transformative step for both of our organizations that will even better position us to serve the evolving needs of our customers," said Dave Banyard, President and CEO of MasterBrand, who will lead the combined company.

The transaction, which has been unanimously approved by both companies’ boards, is expected to close in early 2026, subject to shareholder and regulatory approvals. The combined entity will maintain the MasterBrand name and be headquartered in Beachwood, Ohio, while maintaining a significant presence in Winchester, Virginia.

MasterBrand plans to arrange a revolver expansion with its banking group to pay off American Woodmark’s debt at closing. The company anticipates its pro forma net debt to adjusted EBITDA ratio will be below its target of 2.0x.

In connection with the announcement, American Woodmark provided preliminary first quarter fiscal 2026 results, with expected net sales between $400 million and $406 million. The company has seen challenging market conditions, with its stock down nearly 30% over the past six months, though it maintains a P/E ratio of 8.26, suggesting potential value opportunity.

The information in this article is based on a press release statement from both companies.

In other recent news, American Woodmark Corporation reported its fourth-quarter earnings for fiscal year 2025, which exceeded analyst expectations. The company posted an adjusted earnings per share (EPS) of $1.61, surpassing the projected $1.45. Despite this earnings beat, American Woodmark experienced a decline in revenue, reporting $400.4 million compared to the anticipated $427.39 million. These results highlight a mixed performance, with earnings outperforming expectations but revenue falling short. Investors may find interest in how the company navigates these contrasting results moving forward.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.