Holland & Knight and Greenberg Traurig advise on Masonite/Fleetwood Merger

As the U.S. luxury home market remains buoyant amid high interest rates, Masonite International Corporation announced that its subsidiary will acquire Fleetwood Aluminum Products, LLC, a designer and manufacturer of doors and windows for luxury homes. The all-cash deal values the family-owned, California-based business at $280 million.

“Their stunning door and window systems create a blend of indoor/outdoor living, showcasing natural light, style, security and energy efficiency, while adding exceptional beauty and flexibility to the home,” according to the deal’s press release. “Supporting their focus on innovation, Fleetwood has extensive in-house design, engineering and testing capabilities and holds several patents and trademarks for products with energy-saving and weather-resistant features.”

U.S. Housing Starts

Represents a composite of the independent forecasts from the labeled organizations.
Source: Forisk

The U.S. housing market has faced a tumultuous three years. Initially, the shock of the covid-19 pandemic led many potential builders to put their projects on hold, as new construction during the spring of 2020 fell well below pre-pandemic levels. However, with housing supplies tight and interest rates low, builders returned in force later that year – causing supply chain disruptions to send building prices skyrocketing.

US Housing Market

Source: Madison’s Lumber Reporter

Lumber prices fluctuated widely, with prices crashing to below $260 per thousand board feet during the lockdowns of 2020, thereby causing producers to scale back production. But as the U.S. economy boomed during the end of 2020 and throughout 2021, builders’ demand was voracious. With housing prices high and many Americans at home more, many turned to improving their existing properties. Enabled by rock bottom interest rates, homeowners leveraged their increased savings from stimulus payments plus reduced spending on travel and entertainment to finance homebuilding projects. Lumber prices peaked at nearly $1,500 in March 2022, an astounding 463% over 2020’s lows.

Aluminum prices YTD

Source: Business Insider

The building spree moderated as higher interest rates hit homeowners’ wallets and consumer shifted spending back to travel and entertainment during the second half of 2022 and into 2023. Housing starts declined rapidly during this period and building material prices fell alongside the reduced demand.

Despite economic headwinds, housing prices have held up well, particularly for the luxury homes that Fleetwood serves. From November 2022 to 2023, the median sale price of non-luxury rose 3.3% to $340,000 while luxury homes jumped 9.9% to $1.1 million. Analysts predict steadily increasing residential construction in the years ahead – and Masonite seeks to capitalize on it with this acquisition.

According to Matterhorn’s M&A database, which harnesses both AI and attorneys to digest the granular deal points of publicly announced transactions, Fleetwood is advised by law firm Greenberg Traurig, LLP and Masonite is advised by Holland & Knight LLP.