Ply Gem and NCI Building Systems Inc., a manufacturer of exterior building products for commercial construction, will combine in a stock-for-stock merger that will create a single company with an equity value of about $2.6 billion.

The company will operate under a new name that hasn’t been determined yet, and both Ply Gem and NCI will preserve their existing brands. The company will be headquartered in Cary, N.C., with a significant presence in Houston.

According to NCI’s transaction presentation, the company will explore the possibility of offering adjacent products for curtainwall, storefront systems, commercial windows and punched windows in the medium- to long-term future of the expansion.

Under the terms of the agreement, NCI will issue 58.7 million shares to Ply Gem shareholders. When the transaction closes, NCI shareholders will own 53 percent of the company’s common equity, with Ply Gem shareholders owning 47 percent. The transaction is generally expected to be tax-free to Ply Gem owners for U.S. federal income tax purposes. It’s expected to close in the fourth calendar quarter of 2018, subject to approval by NCI shareholders and customary regulatory approvals

On a combined basis for calendar year 2018, the company is expected to generate revenue of approximately $4.5 billion. After three years, the company expects cost-reduction initiatives and merger-related synergies to yield more than $150 million in annual cost savings. Standalone cost reduction initiatives are already well underway at both NCI and Ply Gem. Combination-specific synergies include manufacturing efficiencies and procurement and general and administrative savings.

“This transformational combination creates the leading exterior building products company with multiple avenues for further growth,” said NCI chair James S. Metcalf, who will lead the integration of the two companies and serve as chair and CEO of the combined business. “Both companies are experiencing sustained momentum driven by meaningful cost savings, and the greater scale and diversification of the combined company support organic growth, margin expansion and longer-term M&A opportunities. With a greater ability to attract and retain top talent in all fields, our combined company will continue to innovate in the exterior building products space – far beyond what either of us could do alone.”

According to the company, the transaction will create “a market-leading North American exterior building products platform providing new construction and repair and remodel solutions for commercial and residential applications.”

“I am grateful and honored to have had the opportunity to lead Ply Gem over the past 12 years, and I am proud of our team’s accomplishments during the past decade of successes and challenges,” said Ply Gem chair and CEO Gary E. Robinette, who will continue to serve in his role until the deal closes. “The joining of these two market-leading exterior building products companies creates a platform for growth, enhanced innovation and cost improvements, while serving all channels of the construction markets.  I am excited for the associates and customers of the combined company and the next evolution of this best-in-class provider of exterior building envelope solutions.”

NCI, headquartered in Houston, is one of North America’s largest manufacturers of metal products for the commercial building industry, selling products such as metal wall and roof systems, insulated metal panels, roll-up doors, trim, accessories and engineered commercial buildings. NCI has approximately 5,300 employees across 38 manufacturing locations throughout North America.

Ply Gem manufactures and sells a variety of products focused on the exterior envelope of single and multi-family homes. Ply Gem’s key products include doors, windows, siding, roofing, metal accessories, stone and other adjacent products. Ply Gem employs approximately 11,600 people across 35 facilities in North America. Private investment firm Clayton, Dubilier & Rice acquired Ply Gem in April 2018 and concurrently merged it with Atrium Windows & Doors.