PGT Innovations Board of Directors Determines that Miter’s Unsolicited Proposal Would Reasonably be Expected to Lead to a Superior Proposal

PGT Innovations, Inc. (“PGTI” or the “Company”), a national leader in premium windows and doors, announced that its Board of Directors has unanimously determined that, while the unsolicited proposal from Miter Brands to acquire all outstanding shares of PGTI common stock for $41.50 per share in cash is not superior to PGTI’s definitive agreement to be acquired by Masonite International Corp (“Masonite”), depending on the outcome of future negotiations, Miter’s proposal would reasonably be expected to lead to a superior proposal if Miter is able to improve several aspects of its proposed transaction.

As announced on December 18, 2023, PGTI entered into a definitive agreement to be acquired by Masonite for $41.00 per share, comprised of $33.50 in cash and 0.07353 shares of Masonite common stock,¹ representing a premium of approximately 56.5% over the closing price of PGTI common stock of $26.20 per share on October 9, 2023.²

“While the PGTI Board of Directors believes the transaction with Masonite remains the best option to maximize value for our stockholders, the improved consideration and near-term value certainty in a potential all-cash transaction with Miter is worth exploring if Miter is able to adequately resolve several issues with its proposal,” said Jeffrey T. Jackson, President and Chief Executive Officer.

Topics PGTI Seeks to Address in Discussions with Miter

• More value for PGTI stockholders:
  • Miter’s latest proposal provides an increase of only 1.2% in transaction consideration relative to the definitive agreement with Masonite as of December 15, 2023, and only a 4.5% increase relative to the Masonite transaction as of January 5, 2024;
  • The modest increase in transaction consideration in Miter’s proposal compares unfavorably to the more substantial average increase in consideration provided in typical topping bids; and
  • Further, the latest proposal would require PGTI stockholders to give up the considerable value upside potential in combining with Masonite to create a leading door and window solutions company with over $4 billion in revenue, $800 million of EBITDA, robust free cash flow generation, a rapid deleveraging profile, and ~$100 million in annual synergies from the proposed transaction.
• Stronger contractual protections to increase closing certainty:
  • Miter’s proposal presents additional closing risks as compared to the pending transaction with Masonite that renders the small incremental transaction consideration insufficient to compensate PGTI stockholders for such risk;
  • Additional contractual protections are required to ensure any proposed transaction with Miter will actually be consummated and deliver superior value to PGTI stockholders; and
  • Miter’s proposal would require PGTI to pay an up-front termination fee of $84 million to Masonite – more than 2.5 times the value of the additional consideration in Miter’s proposal³ – that would not be reimbursed if a transaction with Miter fails to close. Unlike most other topping bids, Miter has failed to offer to pay this fee on PGTI’s behalf which does not reflect the customary confidence of an interloper regarding the certainty of its proposed transaction closing.

Mr. Jackson concluded, “To be clear, we have not concluded that the proposed Miter transaction is superior to our binding transaction with Masonite, and we are not committed to a transaction with Miter. There are several key terms that would need to be negotiated satisfactorily before we would be in a position to recommend a Miter transaction over the Masonite transaction. Rather, we are planning to engage in discussions with Miter since we believe there is a reasonable basis for concluding that it would result in a superior proposal for PGTI stockholders.”

A summary of the steps PGTI and its Board of Directors have taken to maximize value for our stockholders, including in its negotiations with Miter, is included below.

Next Steps

The PGTI Board’s determination that the Miter proposal would reasonably be expected to lead to a superior proposal allows the two companies to negotiate improved terms of a binding acquisition proposal by Miter. If PGTI and Miter are able to negotiate a transaction on terms that the PGTI Board concludes is a superior proposal, Masonite would have the option, over a period of four business days, to offer to improve the terms of its existing merger agreement with PGTI.

Thereafter, if the PGTI Board determines that Miter’s offer is a superior proposal, after taking into consideration any improved terms offered by Masonite, only then would PGTI enter into an agreement with Miter and would there be an obligation to pay Masonite the termination fee. Until that time, the definitive agreement with Masonite remains binding and in full effect, and the PGTI Board reaffirms its existing recommendation of the transaction with Masonite.

Evercore is acting as exclusive financial advisor to PGTI, and Davis Polk & Wardwell LLP is acting as legal counsel to PGTI.

• Over the past several months, we have engaged with 12 different potential strategic and financial counterparties, including Miter.
• We received a total of 15 proposals with ever-increasing deal values, which culminated in the definitive agreement with Masonite for $41.00 per share.The 16^th proposal we received was submitted by Miter on January 2, 2024.
• In March 2023, we learned that Miter had accumulated a ~10% position in PGTI through common stock and derivatives – without paying a premium to PGTI’s stockholders.
• We engaged in negotiations with Miter and received a total of 7 proposals from them (prior to their most recent proposal):
  • Their initial proposal in April 2023 was for $29.00 per share, and they subsequently made multiple proposals with incrementally higher prices;
  • We also entered into a confidentiality agreement with Miter and provided them with detailed due diligence.
• On November 13, 2023, Miter delivered a proposal of $38.25 per share theycharacterized as its “best and final offer.”
  • We informed Miter’s management team that we were prepared to do a deal with Miter above their proposal, and Miter told us that as stockholders of PGTI that if PGTI received an offer for $40.00 per share we “should take it.”
  • Shortly thereafter, Masonite offered $40 per share, but conditioned their willingness to proceed on us entering into exclusivity which we did in reliance on Miter’s statements that their offer was its “best and final” and we “should take [a deal at $40 per share].”
• On December 14, 2023, Miter unexpectedly delivered another proposal for $39.00 per share.
• On December 18, 2023, PGTI announced a deal with Masonite for $41.00 per share.⁴

Recent Events

• On January 2, 2024, Miter submitted a new proposal of $41.50 per share for the ~90% PGTI shares they don’t own.
• The PGTI Board continues to be open to all paths to deliver maximum value to PGTI stockholders – and has concluded that the Miter proposal would reasonably be expected to lead to a superior proposal, if the parties are able to reach agreement on several improvements on price and contractual protections to improve deal certainty.
• The PGTI Board has taken actions designed to maximize value for PGTI stockholders – and stands ready to engage with Miter to see if they can deliver a superior proposal.

For full press release click here.

About PGT Innovations, Inc.

PGT Innovations manufactures and supplies premium windows, doors, and garage doors. Its highly engineered and technically advanced products can withstand some of the toughest weather conditions on Earth and are revolutionizing the way people live by unifying indoor and outdoor living spaces. PGT Innovations creates value through deep customer relationships, understanding the unstated needs of the markets it serves, and a drive to develop category-defining products. Through its brands, PGT Innovations is also a leading manufacturer of impact-resistant windows and doors. The PGT Innovations family of brands include CGI®, PGT® Custom Windows and Doors, WinDoor®, Western Window Systems, Anlin Windows & Doors, Eze-Breeze®, Eco Window Systems, NewSouth Window Solutions, and Martin Door. The company’s brands are a preferred choice of architects, builders, and homeowners throughout North America and the Caribbean. Their high-quality products are available in custom and standard sizes with massive dimensions that allow for unlimited design possibilities in residential, multi-family, and commercial projects. For additional information, visit http://www.pgtinnovations.com.

Contact:

Stephanie Cz – Corporate Communications and PR Manager – scz@pgtinnovations.com – (941) 480-1600

Source: PGT Innovations, Inc.