Beacon Roofing Supply, a leading distributor of building products based in Herndon, Va., has announced its agreement to repurchase its Series A preferred stock held by private-equity firm Clayton Dubilier & Rice (CD&R). The buyback, valued at $804.5 million, is expected to be completed by August 11, and will be funded through a combination of new and existing debt funding, as well as cash on hand.
One of the key benefits of this buyback is the reduction in Beacon’s diluted share count on an as-converted basis, which will be reduced by approximately 9.69 million shares. Additionally, the repurchase will eliminate $24 million in preferred dividends annually, leading to a simplification of Beacon’s capital structure.
CD&R, a New York buyout firm, originally invested in Beacon in 2018 to support the company’s acquisition of Allied Building Products. As part of the agreement, CD&R will retain nearly 15.2 million common shares of Beacon.
In light of the buyback, changes will be made to Beacon’s board composition. Philip Knisely, an operating partner at CD&R, will continue to serve on the board but will step down from his role as non-executive chairman. Stuart Randle, currently the lead independent director, will assume the position of non-executive chairman. Nathan Sleeper, CEO of CD&R, will depart from the Beacon board.
This strategic move by Beacon Roofing Supply showcases its commitment to optimizing its capital structure and driving enhanced value for its shareholders.
