June 26, 2019 / 6:00 PM / 2 months ago

Exclusive: HG Vora builds Owens Corning stake to push for changes - sources

(Reuters) - Hedge fund HG Vora Capital Management LLC is building a stake in Owens Corning to push the U.S. composites and building materials company to explore options that include a sale or a break-up, people familiar with the matter said on Wednesday.

HG Vora’s investment in Owens Corning comes as the Toledo, Ohio-based company has been seeking ways to bolster its roofing and insulation businesses, which have suffered amid a slowdown in the construction of new homes.

The size of HG Vora’s stake in Owens Corning could not be learned. The sources requested anonymity because the matter is confidential. HG Vora declined to comment.

“As a matter of policy, the company does not comment on interactions with specific shareholders or on speculation,” Owens Corning spokeswoman Katie Merx said in an email.

Owens Corning shares rose 10% to $55.98 on the news, giving the company a market capitalization of $6.1 billion. The company also had total long-term debt as of the end of March of $3.7 billion.

Owens Corning makes glass fiber used to reinforce composite materials, as well as insulation and roofing used in residential, commercial and industrial applications. It has been raising some of its insulation and roofing prices in an effort to improve its profit margins.

HG Vora, founded by Parag Vora a decade ago, is coming off a big win at casino operator Caesars Entertainment Corp, where it built a stake before the company agreed to sell itself this week to Eldorado Resorts Inc in a $17 billion cash-and-stock deal.

There has been a wave of dealmaking activity in the construction sector. Masco Corp, which makes KraftMaid cabinets and Delta faucets, said earlier this month that it plans to sell its Masco Cabinetry, Milgard Windows and UK Window Group, while Armstrong Flooring said last year that it sold its wood flooring segment to private equity firm American Industrial Partners.

Eagle Materials Inc announced plans earlier this year to separate its heavy and light materials business and said it would pursue alternatives for its oil and gas proppants business, after being pressured to take steps by activist hedge fund Sachem Head Capital Management LP.

Reporting by Svea Herbst-Bayliss in Boston; Editing by Nick Zieminski and Lisa Shumaker

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