Carlyle backs out of $1.1bn roofing deal

The firm will receive a $29 million termination fee from ElkCorp.

The Carlyle Group has decided not to submit a new proposal for the acquisition of ElkCorp, a roofing and buildings products company, ElkCorp told shareholders.

The firm’s decision follows ElkCorp’s action of entering a binding agreement with Building Corporation of America, a New Jersey-based roofing products maker. Under that agreement, Building Materials will acquire ElkCorp’s outstanding common stock for $43.50 per share.

ElkCorp will pay Carlyle a termination fee of $29 million.

Carlyle had made three offers for ElkCorp. The original one came in December and offered shareholders $38 per share, a 51 percent premium over the November 3 closing price. The firm announced its review of “strategic alternatives” on November 4. Carlyle increased its offer to $40.50 per share, raising the total transaction value to about $1.05 billion over the previous $1 billion.

Less than a week later, Carlyle again increased its offer for ElkCorp, giving shareholders $42 per share – a total transaction value of approximately $1.1 billion.

Carlyle had planned to merge ElkCorp with one of its recent acquisitions, Atlas Roofing Corporation, a maker of commercial and residential roofing materials.