By Sabrina Valle
NEW YORK, Aug 6 (Reuters) - U.S. cabinetry manufacturers MasterBrand Inc MBC.N and American Woodmark Corp AMWD.O said on Wednesday they will merge in an all-stock deal, creating a company worth $3.6 billion, including debt, amid consolidation in the highly fragmented building products sector.
Stocks of both companies had fallen by about half over the past year, with high interest rates cooling building activity since 2022 by raising borrowing costs for both developers and homeowners.
American Woodmark's stock jumped 15% to $62 following the news, and MasterBrand rose 8.12% to $12.25 in afternoon trading.
Expectations are growing that the Federal Reserve will lower interest rates, which would revive housing demand and renovations. The U.S. faces a record shortage of 4.7 million homes, Zillow said in a July 2025 analysis.
The building sector is expected to grow, supported by aging housing stock, persistently short supply, and renewed commercial and infrastructure development funded by the $1.2 trillion Infrastructure Investment and Jobs Act, according to an Oppenheimer analyst report.
The median age of U.S. homes remains in the early 40s, the oldest on record, according to the U.S. Census Bureau's 2023 housing stock snapshot, supporting long-term demand for repair, remodeling and building products.
Deal activity has surged in building products this year, in a sector largely shielded from tariffs, as most manufacturing occurs domestically. These include Home Depot's acquisition of GMS, and an $11 billion buyout offer of Beacon Roofing from billionaire Brad Jacobs' firm QXO.
Under the American Woodmark deal, each of its shares will be exchanged for 5.15 MasterBrand shares, giving MasterBrand 63% ownership of the combined company and American Woodmark 37%. An earnings boost is expected by the second year, with annual estimated savings of $90 million by the third year.
The combined company would have a pro forma equity value of $2.4 billion and an enterprise value of $3.6 billion.
The transaction is expected to close in early 2026.
Rothschild & Co acted as MasterBrand's financial advisor and Jefferies provided financial advisory to American Woodmark.
(Reporting by Sabrina Valle in New York, Editing by Dawn Kopecki and Richard Chang)
((sabrina.valle@tr.com - 713-344-4181))