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Investing.com -- S&P Global Ratings revised its outlook on MasterBrand Inc. to positive from stable following the company’s announced merger with American Woodmark (NASDAQ:AMWD), while affirming its ’BB’ credit rating.
The proposed combination will create one of the largest cabinet manufacturers in the U.S., with expected revenue exceeding $4.4 billion and pro forma adjusted EBITDA of about $540 million before synergies, according to S&P Global Ratings.
The rating agency expects pro forma debt leverage to be approximately 2.1x after adjusting for cash and leases, providing financial flexibility amid weaker macroeconomic conditions. The companies have identified $90 million in synergies over three years that could enhance cash flows and leverage.
S&P projects EBITDA margins to remain flat for the combined company in 2026 and 2027 due to weaker residential construction activity and soft repair and remodel demand. Adjusted EBITDA is expected to reach $500 million-$550 million, resulting in EBITDA margins of 12%-13% over the next 12 to 18 months during integration.
The merger significantly expands MasterBrand’s market share in cabinet manufacturing and broadens its geographic footprint, helping offset exposure to discretionary products. The combined entity will offer kitchen cabinetry products across multiple price points.
S&P could raise MasterBrand’s rating following successful completion of the merger if the combined entity maintains debt to EBITDA below 2x. Conversely, the outlook could revert to stable if debt leverage remains above 3x into 2026, if the company pursues aggressive debt-financed acquisitions, or if the merger fails to close as expected.
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