In line with its acquisition strategy, Beacon Roofing Supply, Inc. (BECN) has inked a deal to acquire leading wholesale distributor Cassady Pierce Company (“Cassady Pierce”). The terms of the deal were undisclosed. The transaction is expected to close on May 31, 2012.
The acquisition is expected to fortify Beacon Roofing by expanding its businesses in the Western Pennsylvania region and help the company in augmenting its portfolio of building products.
Moreover, the purchase of Cassady Pierce is in line with the acquisition strategy of Beacon, which is eager to buy market leaders in different geographic areas with the clear intent of extending its footprint into potential yet unexplored markets.
About Cassady Pierce
Based in Pittsburgh, Pennsylvania, Cassady Pierce is a leading distributor of residential and commercial exterior building products. The company chiefly caters to professional roofer, remodeling contractor, builder, general contractor and retail home center markets across Western Pennsylvania, Northern West Virginia and the Eastern countries of Ohio.
Other Acquisitions
Per its aggressive acquisition strategy, Beacon purchased the leading roofing distributor Enercon Products in the second-half of 2011, thereby expanding its market presence in Western Canada. In addition, the company also acquired Nova Scotia based The Roofing Connection and Colorado based Fowler & Peth, Inc. in 2011.
Our View
Credited with a long history of making new acquisitions and increasing its revenues and operating margin, Beacon now has a strong balance sheet along with adequate credit facilities, which support its acquisition strategy.
However, decline in housing starts and weak commercial construction activity has significantly affected Beacon’s residential and non-residential roofing sales volumes in most regions. Moreover, the low corporate profits and tight credit conditions fail to provide any near-term growth drivers for non-residential roofing.
Currently, we have a long-term Neutral recommendation on Beacon. The stock retains a short-term Zacks #2 Rank (Buy).
BEACON ROOFING (BECN): Free Stock Analysis Report
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