Glass Industry M&A

Sources: Freedonia Group, Glass Magazine, S&P Global Market Intelligence, PitchBook, company filings and other publicly available data.

Consolidation has reshaped the glass supply chain and redefined geographies and industry participants. The value chain has seen consolidation among a diverse base of companies, from value-added glass and metal fabricators to glazing contractors that support regional and local markets. This evolution underscores a still fragmented supply chain, presenting consolidation opportunities to expand infrastructure and achieve synergies through scale. This article presents key market acquisitions from recent years and offers an outlook for future activity.

Private equity activity

Private equity funds historically have shown broad-based interest in the building products industry, and noteworthy has been recent interest in the glass space. Financial sponsor transaction activity is accelerating, with acquisitions a primary lever to build regional and national consolidation platforms in a fragmented marketplace. Examples of private equity platform investments in the sector include:

• Stellex Capital Management invested in Custom Glass Solutions in October 2018, which it purchased from Guardian Industries. It also announced the add-on acquisition of North American Specialty Glass in May 2019, bringing new capabilities in framed assemblies to the company. NASG was purchased from Consolidated Glass Holdings. 
• AV Capital is growing American Insulated Glass, which it acquired in 2017, with the stated goal to pursue M&A opportunities to expand the company’s geographic coverage and service capabilities. The sponsor announced the acquisitions of Tennessee Glass Wholesalers in September 2019 and Innovative Glass of America in November 2018, moves intended to expand the company’s footprint in the Southeast U.S.  
• Consolidated Glass Holdings, a portfolio company of Grey Mountain Partners, has completed nine deals since acquiring the business in 2011, including J.E. Berkowitz in November 2016, its last acquisition to date. 
• Acquisitive Trulite has completed seven bolt-on acquisitions under the ownership of Sun Capital Partners, which purchased the company in 2010. Among the deals are VFG Group in 2016, which expanded Trulite’s presence in the Canadian market; and AGC’s U.S. commercial fabrication assets in 2014. The latter deal broadened the company’s national footprint, adding flat glass expertise for applications in the solar, construction, automotive and other specialized industries.

Strategic acquisitions

Industry players are selectively pursuing strategic acquisitions to bolster topline growth, with buyers looking to access technology, broaden product portfolios and expand geographic markets. Some illustrations include: 

• Sweden-based Assa Abloy completed the purchase of Stiles Custom Metal in October 2019. Stiles supplies built-to-order commercial steel doors and window systems to customers nationwide. The acquisition is expected to strengthen the company’s U.S. offering in the segment and grow its West Coast footprint.  
• Oldcastle BuildingEnvelope acquired architectural glass and metal fabricator SIGCO in July 2018, a move to grow its glass fabrication and architectural aluminum products businesses. Maine-based SIGCO is a leading supplier in the New England region. 
• Vitro has historically been among the active consolidators. The 2017 purchase of Pittsburgh Glass Works and PPG Industries’ flat glass business in 2016 solidified its U.S. market position with the largest float glass capacity. 
• Koch Industries acquired Guardian Industries in 2017, adding new capabilities in glass manufacturing, coatings, and specialty building products distribution. 

Valuations

The broader M&A market remains increasingly competitive for high-quality assets, which has fueled an elevated pricing environment throughout 2019. In November, the average EBITDA multiple for strategic and financial acquirers increased to 9.04x in the lower middle market (defined as enterprise values of $500 million or less). The financing markets are flush with capital and remain highly liquid, with leverage levels—measured by total debt to EBITDA—rising to near-decade highs. 

Economic uncertainty has muted growth expectations, with cyclical industries such as building products subject to greater scrutiny and valuation discounts. Proven business models with quantifiable growth prospects continue to garner significant buyer interest and premiums in the current market.