Two small-cap furniture makers announce merger; their shares jump

Shares of furniture manufacturer MasterBrand rose yesterday, August 6, more than 9%, while its peer Woodmark added more than 14% – the two companies will merge, they announced. The result will be a financially stronger company that will show greater resilience through market cycles, Noble Capital Markets argues.

Small-cap furniture makers MasterBrand and American Woodmark announced plans to merge yesterday, August 6, which sent both stocks higher.

Shares of MasterBrand, which has a market capitalization of $1.6 billion, jumped 9.3% to a three-month high yesterday and have gained another 2% in early trading today. American Woodmark, valued at $899.9 million, surged 14.2% to $62.05 per share, its highest level since late February.

Under the terms of the deal, American Woodmark shareholders will receive MasterBrand stock and will own 37% of the combined company. MasterBrand investors will hold the remaining 63%. The merger will create a company with a combined value of approximately $2.4 billion, a broader brand portfolio, expanded geographic footprint, and enhanced operational flexibility, the companies said in a joint statement. They also project run-rate cost synergies of about $90 million within three years of closing.

The transaction, approved by both boards, is expected to close in early 2026, pending regulatory and shareholder approval.

The merger will create a financially stronger company, Noble wrote. MasterBrand has reported second-quarter results, with net sales up 8% year over year at $730.9 million and net income down 18% at $37.3 million. Adjusted EBITDA was unchanged at $105.4 million. 

American Woodmark has released preliminary results for the first quarter of its fiscal 2026, which ended on July 31. Net sales came in between $400 million and $406 million, while net income ranged from $12.5 million to $14.5 million. Adjusted EBITDA is estimated at $41.75 million to $43.75 million.

An improved financial profile is expected to enhance free cash flow generation, provide greater resilience through market cycles, and enable increased investment in growth initiatives, automation, and technology, Noble adds.

Since 2022, high interest rates have been cooling building activity by raising borrowing costs for both developers and homeowners, writes Reuters. However, expectations are strengthening that the Fed will soon cut rates. This would revive housing demand and renovations. The U.S. faces a record shortage of 4.7 million homes, Zillow said in a July 2025 analysis.

The AI translation of this story was reviewed by a human editor.