TRG | The Bottom Line – 2/18

On the theme of consolidation and fundamental industry changes in the wake of Covid, the construction industry continues to see an acceleration of deals. Last week Zurn Water Solutions (ZWS) announced its intentions to buy perennial TRG C&I Conference attendee Elkay (privately-held). Elkay produces commercial water products (fountains, bottle fillers, sinks), with some resi exposure, and as such, the combination further expands Zurn’s non-res end market offerings. TRG believes the multiple (EV/EBITDA 14x pre-synergy, 9.8x post $50MM of synergies) validates the current and ongoing strength of this business and industry, as well as improves the already entrenched position of Zurn. Also this week, private equity fund CD&R doubled down in its investment in Cornerstone Building Brands (CNR), the largest manufacturer of exterior products in North America. CNR on Valentine’s Day acknowledged the receipt of a non-binding proposal by CD&R to acquire all of Cornerstone (49% remaining outstanding shares) for $24.65 in cash per share. Nothing says “love” like an all-cash bid in today’s market! #trgbuildingideas