Construction and industrial products giant Saint-Gobain has agreed to buy Canada’s largest siding manufacturer as part of its push to broaden its North American product portfolio.
Paris-based Saint-Gobain is paying $928 million in cash for Kaycan Ltd., which is on pace to ring up $472 million in sales and EBITDA of $83 million this fiscal year. Founded in Quebec in 1974 by the Dubrofsky family, Kaycan has grown to run nine plants in Canada and three in the United States while employing about 1,300 people.
The Saint-Gobain team expects to produce $30 million in savings and growth in the next three years, with that figure split relatively evenly between back-office consolidation, manufacturing and freight efficiencies, procurement savings and cross-selling. The company also plans to quickly sell Kaycan’s U.S. distribution arm, which generates about $10 million in EBITDA on annual sales of roughly $70 million. But Saint-Gobain North American CEO Mark Rayfield told IndustryWeek the deal, which is expected to close by year’s end, is motivated first and foremost by enlarging the company’s lineup of exterior building products.
“This is a growth story,” Rayfield said May 31, noting that Saint-Gobain’s CertainTeed brand is No. 2 in the United States. “Canada, like the U.S., is underbuilt when it comes to housing […] This gets us into selling a full system for the façade” by adding siding to Saint-Gobain’s lineup of gypsum, insulation, ceilings and roofing products.
Buying Kaycan will grow Saint-Gobain’s business in Canada to more than $820 million in sales (from about $595 million) and 1,900 employees working at 20 plants. It also brings into the company products line made from metal and engineered wood, something Rayfield said had been on his team’s priority list. Kaycan’s sales have grown at an annual rate of 11% over the past four years while adjusted EBITDA has more than doubled.
“Our team has been laser-focused on providing the best customer service possible throughout Canada and the United States, all while pushing the boundaries of imagination and innovation to expand our product portfolio,” Kaycan President Lionel Dubrofsky said in a statement. “We are filled with gratitude for our team’s hard work over the past 48 years, and we’re thrilled to see what comes next for our combined companies.”
Saint-Gobain has been busy of late expanding its North American portfolio. Most notably, the company in December said it will spend $2.3 billion to buy GCP Applied Technologies, a manufacturer of roofing and waterproofing membranes. It also has committed $400 million to add capacity at plants in California, Georgia, North Carolina and Ohio.
The company employs about 15,000 people in North America and last year grew its sales on the continent by more than 20%. Including its pending acquisitions, sales on this continent will top $10 billion while EBITDA will be in the neighborhood of $2 billion.
