(Reuters) -U.S.-based Quanex Building Products will buy doors and windows supplier Tyman in a cash and share deal that values the British firm at about 788 million pounds ($976 million), the companies said on Monday.
Tyman shares surged 25% in early trade.
The acquisition comes at a time U.S. housebuilders are cutting prices and offering other incentives to increase sales amid hurdles created for many first time buyers by higher mortgage rates.
Tyman joins a growing list of companies leaving the London stock market, after Britain’s biggest chip company ARM floated in New York last year, and building supplies firm CRH and plumbing equipment company Ferguson shifted their main listings to the United States.
Under the terms of the deal, Tyman shareholders will get 240 pence in cash and 0.05715 of a new Quanex share for each Tyman share held.
The offer represents a premium of about 35.1% to London-listed Tyman’s Friday closing price of 296 pence.
The main offer comprises about 60% by value in cash and the rest in new Quanex shares, while an alternative offer gives the option to get the consideration at a ratio of 0.14288 of a new Quanex share to every one Tyman share held.
The companies said Tyman will become a wholly-owned unit of Quanex following the completion of the transaction.
Quanex and Tyman directors intend to unanimously recommend their shareholders to vote in favour of the proposed deal.
Quanex directors said they believed the acquisition would help create a more diversified supplier in the building products sector, particularly across its windows and doors designing portfolio in North America.
Quanex expects higher core profit margins from the increased scale after the combination, and significant impact of run-rate cost synergies of $30 million to be fully achieved by the second year following completion of the transaction.
The Texas-based company also said it would get Tyman delisted from the London Stock Exchange and intended to close its head office in London, but would not shut down any of the British firm’s manufacturing facilities.
The combined group will be listed on the New York Stock Exchange, Quanex said in a joint statement.
($1 = 0.8077 pounds)
(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Savio D’Souza, Subhranshu Sahu and Emelia Sithole-Matarise)
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