LafargeHolcim looks to solidify U.S. presence with Firestone Building Products purchase

NASHVILLE, Tenn.—Cement and concrete giant LafargeHolcim Ltd. is buying Firestone Building Products with plans to become a global player in flat roofing systems.

Zug, Switzerland-based LafargeHolcim is paying $3.4 billion to Bridgestone Americas Inc. to create an entryway into the new business segment, while also boosting its existing sales in the U.S.

Adding roofing to the company's current U.S. business will bring sales to more than $6 billion annually, growing LafargeHolcim's biggest market.

Firestone Building Products is part of Bridgestone Americas Inc. of Nashville, and the decision to sell off the roofing business creates cash to reinvest in the company's core tire business as well as mobility solutions.

For LafargeHolcim—best known for cement, concrete, aggregates and related building supplies—the purchase of Firestone Building Products is seen as a growth platform to allow expansion into the Europe and Latin America flat roofing markets.

LafargeHolcim is buying an already-profitable roofing business with estimated sales of $1.8 billion in 2020 and earnings before interest, taxes, depreciation and amortization of $270 million.

"This acquisition is a milestone in LafargeHolcim's transformation to become the global leader in innovative and sustainable building solutions," the company said.

CEO Jan Jenisch called the deal a "transformational acquisition" for LafargeHolcim. "That's a real milestone for us in transforming LafargeHolcim into a company with the most innovative and most sustainable building materials products for the future."

"I feel really fortunate to partner with such an iconic company such as Firestone Building Products. They are the leader in the U.S. market. They are the leader in the most attractive flat roofing systems. And they are the leader in systems selling, selling all of those insulated roofs, cool roofs, green roofs. They are really building the roofs for our future," he said.

Firestone Building Products has 15 manufacturing faculties, described by the CEO as state-of-the-art. A total of 13 of those sites are in the U.S. and two are in Europe. "There are no shortcuts. They have the highest standards in manufacturing, in health and safety and all the technologies. This was a very good finding we had from looking closely at the business in the last couple of weeks," the CEO said.

The company has two EPDM membrane manufacturing locations, two thermoplastic polyolefin membrane manufacturing sites and one liquid applied waterproofing manufacturing facility. There are an additional eight insulated products manufacturing plants as well as one metal and one asphalt manufacturing location.

Research and development happens at three technical centers in Waukesha, Wis.; Fishers, Ind.; and Brussels, Belgium.

Firestone Building Products is the fourth-largest flat roofing company in the world with 4 percent of the market share. The top firm, by contrast, has a 7-percent share, LafargeHolcim said.

"That allows for growth in the U.S. We have still a lot to do in the U.S. market. We are far away from having the right size," Jenisch said. "We have a great opportunity here to accelerate the expansion in Europe. With the LafargeHolcim footprint in all the key markets, I think we can support here a lot of smart organic investments but also some bolt-on acquisitions to multiply our sales and our market position in Europe. I think the same we will do in Latin America where we have huge opportunities," he said.

In Latin America, LafargeHolcim also will use its Disensa retail chain of about 2,300 construction materials and home improvement stores to help sell Firestone Building Products offerings across the counter. Disensa has retail sites in Mexico, Brazil, Colombia, Ecuador, El Salvador, Argentina and Costa Rica.

Firestone Building Products' liquid applied membrane products are expected to be especially popular through Disensa, Jenisch said. Disensa, popular with smaller house builders and craftsmen, is fast growing and opening a store approximately every other day.

While flat roofs and concrete might not appear to have much in common on the surface, LafargeHolcim company said the two are "highly complementary and synergistic."

That's because they have complementary access to projects, owners and specifiers, as well as complementary distribution channels. LafargeHolcim can leverage positions in Europe and Latin America to accelerate roofing expansion in those markets.

LafargeHolcim expects to be able to save $110 million in annual costs by combining Firestone Building Systems with its existing operations. The deal also will be profitable from the very first year. The acquisition is expected to close during the second quarter of this year.

Firestone Building Products is based in Nashville and has about 2,000 employees. U.S. sales account for 87 percent, with Europe at 8 percent and 5 percent elsewhere.

"I feel very fortunate to have the opportunity to have such an iconic company joining us. This is something normally not for sale and we are lucky to have the opportunity to welcome Firestone Building Products in our group," Jenisch said.

Bridgestone signaled Firestone Building Products was being put in play in recent weeks. While the company previously confirmed a potential sale was in the works, officials declined to say much about the possibility.

Firestone Building Products roofing systems include the use of EPDM rubber and thermoplastic polyolefins. Another approach uses styrene-butadiene-styrene. FSBP divisions include GenFlex, GenTite Residential Roofing Systems and Gaco.

"This transaction will create new growth opportunities for Firestone Building Products and allow Bridgestone to focus its resources to further invest in the company's tire business and rapidly growing mobility solutions business," Bridgestone Americas CEO Paolo Ferrari said in a statement.

"Like Bridgestone, LafargeHolcim is a global company with a strong financial position and thriving culture. We know they will take great care of our Firestone Building Products employees and customers, and ensure the business enjoys growth and success for many years to come," he said.

Firestone Building Products will continue to be based in Nashville after the sale, and all 1,900 employees will move to LafargeHolcim.

Taylor Cole is president of Firestone Building Products. He called the sale "a big moment" for the company. "We are in a prime position to accelerate our growth by combining Firestone Building Products' advanced technologies and know-how with LafargeHolcim's global scale and reach," he said in a statement.