OC: WSJ Reports CSL Has Made Unsolicited Acquisition Offers for OC

Research evidence excerpt

OC: WSJ Reports CSL Has Made Unsolicited Acquisition Offers for OC

date does not surprise us given the quality of OC's businesses (in our view) and

cheaper recent trading valuation (OC stock was trading at ~14x EPS/~8x '26E EBITDA as of last Friday close vs. peers ~16x/~10x

EPS/EBITDA). From a CSL perspective, we believe the combination makes sense in theory given the potential for 'low hanging'

synergies given the two companies complementary focuses in roofing (residential focus for OC, commercial for CSL) and combined

focuses in waterproofing and other complementary roofing products (OC has a strong components business). A combined CSL-

OC could also make sense from the perspective of distribution where all the major roofing distributors focus on both resi and

commercial roofing as well as waterproofing. Outside of CSL, we believe OC could also be of interest for other large building

products/materials platforms looking to build US footprints in roofing/insulation manufacturing, so publicized interest here from

CSL could also spark additional dialogues. Within residential roofing, we note Standard Industries-owned GAF and Saint-Gobain-

owned CertainTeed are sizable competitors to OC within its roofing markets (and insulation as well for CertainTeed) that have

the backing of larger platforms. A combination with either of these companies would likely face regulatory hurdles, as would one

with Johns Manville/Berkshire (also would create a complementary resi/commercial roofing platform, but the combined shares

in insulation would be a material hurdle).

In terms of a potential acquisition price, we believe OC has been frequently undervalued in the public markets with a 3/5/10-

year average trading multiple of ~7x EV/EBITDA (vs. peer group avg.