Lone Star opens the window to an Aussie return

Stegbar windows is one of Jeld-Wen’s brands.

Almost two years after it shut its office in Australia, it appears that Lone Star Funds is back on the local mergers and acquisition scene with a bid for Jeld-Wen.

The US-based private equity firm joins Bain Capital, BGH Capital and Allegro Funds in vying for Jeld-Wen Australia and New Zealand, which earlier was estimated to be worth about $1bn and is up for sale through Macquarie Capital.

After first-round offers for the company were recently accepted, second round bids are due in about two-and-a-half weeks.

Lone Star closed the doors to its Australian outpost around June 2020 after being headed by former Macquarie banker and Fortress Investment Group executive Jason Howes, who now works at Dexus.

Lone Star started operating with a base in Sydney from September 2016 under the watch of Mr Howes.

A year before, it bid for GE Capital’s Australian-based loans, but missed out on the $2bn portfolio to Sankaty Advisors, which is now called Bain Capital Credit.

It made an offer for AWE in 2016 and also took out Sino Gas and Energy four years ago in a $530m takeover bid.

Other targets it has cast its eye over includes retirement village operator Aveo Group, which was purchased by Brookfield for $1.3bn, while in 2019, Lone Star was believed to be assessing an acquisition of Boral, which is the country’s largest building materials provider with a major presence in the US.

However, a deal never eventuated.

Founded in 1995, the Texas-based private equity firm globally is known as one that typically targets distressed assets and is believed to have more than $US45bn ($64.3bn) of assets under management.

It has a particular focus on building materials.

Lone Star bought HeidelbergCement, including Hanson’s North American building products business, in 2015 and it later listed the operation on the London Stock Exchange as a company known as Forterra.

It purchased German building materials maker Xella, reportedly for about $US2.2bn.

It bought the Stark Group, which is the largest retailer and distributor of building materials in the Nordic countries in 2017, for €1.025bn ($1.63bn).

Jeld-Wen owns property in Australia that could be worth hundreds of millions of dollars – no doubt a major drawcard for private equity.

Jeld-Wen’s Australasian operation generates between $90m and $100m of earnings before interest, tax, depreciation and amortisation.

The company operates more than 120 manufacturing facilities in 19 countries, producing and distributing interior and exterior doors, wood, vinyl and aluminium windows.

It makes wall systems, shower enclosures, closet systems and other components used in the new construction, as well as repairs and remodels residential homes and non-residential buildings.

Jeld-Wen holds the number one position in Australasia, but the unit was placed up for strategic review with it generating just 10 per cent of its global revenues.

It employs about 5000 people in the region and comprises 41 manufacturing locations across Australia, Malaysia and Indonesia.

Notable brands include Corinthian, Stegbar and Breezway.