A few days ago I wrote that the review period at Masco US to decide on what to do about it’s UK window businesses was nearing it’s end. You can catch up on that article here.

Well, right on time, they have made a fresh announcement as to what their intentions are.

Pursue Divestitures

Here is the announcement just released from Masco US:

Masco Corporation (NYSE: MAS), one of the world’s leading manufacturers of branded home improvement and building products, announced today that it has concluded its strategic review of its Cabinetry and Windows businesses and will pursue the sale of these businesses.

“Since we announced the strategic review of our Cabinetry and Windows businesses in March, we have worked with our external advisors, our Cabinetry and Windows business units, and our Board of Directors to evaluate alternatives to best deliver long-term value for our shareholders,” said Keith Allman, Masco’s President and CEO.  “We have determined that pursuing the sale of Masco Cabinetry, Milgard Windows and UK Window Group in three separate transactions is the most appropriate path forward to accomplish this value creation.  We expect that the sales of these businesses will be concluded in approximately six to nine months, assuming that each of these transactions can be completed on acceptable terms and conditions.”

“Over the past five years, we have executed on our strategy to reduce our cyclicality by increasing our exposure to the repair and remodel segment of the housing market,” continued Allman.  “This began with the spin-off of our installation services business and continued with a focus on improving the operations of our Cabinetry and Windows businesses.  The strategic actions we are announcing today will complete the process of reducing our exposure to the new construction segment of the market and position us to focus on our less cyclical Plumbing Products and Decorative Architectural Products businesses going forward,” concluded Allman.

You can read the entire press release here: http://masco.com/news/news-stream/masco-corporation-announces-intention-to-pursue-divestitures-of-cabinetry-a/

This is big news. The rumours have for a while that UKWG would be put up for sale, this now confirms it. The release also confirms that it would be sold separately to the other companies Masco is spinning off.

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Questions to be answered

There was a caveat in that press release, which was: assuming that each of these transactions can be completed on acceptable terms and conditions.

That is a polite way of saying that a sale of these companies aren’t guaranteed, and the buyers will have to meet Masco’s requirements. So, with that being the case, the question then becomes who would want to buy UKWG, and would they want all, or just part of the group?

The Masco UK Window Group has various brands:

  • Duraflex
  • UK Fabrication
  • Phoenix Doors
  • UK New Build
  • Seven Day
  • Evolution

Now we don’t know what Masco’s terms and conditions for it’s sale are. Do they want the whole group to be sold as one? Would they be happy to sell off indivdual brands? That remains to be seen.

The standout name in that half-dozen brands is Evolution. One of the pioneers of the recent timber alternative explosion in the UK. It still has high quality value. If companies are going to start showing interest in buying, the Evolution would be one of the gems to gain people’s attention. I’m not completely convinced that the group would be sold whole.

Its likely that interested parties may wish to purchase only certain brands, depending on their medium to long term strategies for their own companies. For example, another systems company may want to snap up Duraflex, if only to merge it with their own and absorb the preferred parts.

Masco have given themselves 6-9 months in which to complete a sale. So we may not find out what is going to happen until the early part of 2020.

It’s also worth noting that there will be a great deal of concern from those who work at the companies under the UKWG umbrella. This decision is out of their hands of course, but they will all be hoping that new owners of their employers will indeed be found as soon as possible to ensure stability is brought back to the companies.

Interesting times ahead, and I suspect this won’t be the only other company that is put up for sale.

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