Last week on August 5, MasterBrand Inc. concluded a deal wherein “they will combine with American Woodmark via an all-stock merger,” according to a press release printed in the trades publication Lumber Blue Book.
MasterBrand Inc started as the United Cabinet Corporation, opening manufacturing operations in Celestine, Illinois. Known for its “Aristokraft” brand, it forged a strong reputation during the post World War II housing boom in the 1950s and 60s. In the 1990s, the company American Brands acquired a number of established cabinet names. Corporate changes over the years brought these and other names together under Fortune Brands, which also sold a large selection of other home improvement and maintenance products.
Three years ago, Fortune Brands separated itself from its cabinetry. MasterBrand Inc formed as an independent company, but also the largest cabinet manufacturer in the United States. In 2022 the brand that would make up MasterBrand earned $2.9 billion in revenues.
The deal will give MasterBrand shareholders 63 percent of the combined company and American Woodmark shareholders 37 percent.
In the release to Lumber Blue Book, MasterBrand Chief Executive Officer Dave Banyard explained that “bringing together MasterBrand and American Woodmark will be a transformative step for both of our organizations.” He added that it will “better position us to serve the evolving needs of our customers and provide consumers with more choice and access.”
He went on to describe how “unique but complimentary strengths” and “strong and broad portfolios” will strengthen the newly formed organization. He also referred to “strong progress in integrating Supreme Cabinetry Brands and our continuous efforts to prioritize executional and financial discipline.”
With the merger so new, neither State of West Virginia nor local economic development officials have yet to comment. Winchester, Virginia based American Woodmark operates 18 manufacturing and distribution facilities in the United States and Mexico.
The company has issued no word yet on what will come for those facilities. Four are located in Mexico, three in Tijuana and one in Monterrey. Two more operate in California, one of the least friendly states to manufacturing in the United States. While West Virginia on paper offers a more competitive environment to do business than California and Maryland, another state with an American Woodmark plant, it remains to be seen what MasterBrand will do.
The MasterBrand website touts the advantages of operating facilities in small towns that also have higher education opportunities and are located in a certain proximity to larger urban areas.
On the page of its site that lists locations, MasterBrand states that towns hosting its facilities “offer both the traditional benefits of small town living — friendly, tight communities; good schools; access to nature and outdoor activities; and easy, stress-free commutes — along with the access to culture, entertainment, and higher education that the larger surrounding communities can provide.”
That said, MasterBrand stated in its release that “the combined organization expects to unlock meaningful cost synergies” which will include “reduction of overhead and procurement expenses, manufacturing network optimization, and operational excellence through implementation of best practices and technologies from both companies.” This may indicate that the combined company expects to pursue efficiencies through use of advanced technology and paring down redundant operations.
Scott Culbreth, CEO of American Woodmark, stated that “with MasterBrand, we are joining a partner that shares our commitment to investing for growth, investing in associates, and investing for the future” while “creating exciting new opportunities for team members.”
Based on share prices, the merged business will “have a pro forma equity value of $2.4 billion and an enterprise value of $3.6 billion.”
