Beacon Roofing Supply Inc., Herndon, Virginia, on Monday announced it has agreed to sell its interior products business — consisting of 81 branch locations where it distributes a variety of construction products to both residential and commercial contractors — to affiliates of the private equity firm American Securities LLC for $850 million.

The transaction expected to close during Beacon’s fiscal 2021 second quarter, subject to customary regulatory approvals. The company said it intends to use $750 million from this divestiture to “reduce net leverage and strengthen its balance sheet.”

“Today’s announcement represents an important strategic decision for Beacon,” said Julian Francis, Beacon’s president and CEO. “After undertaking a thorough analysis, we determined that a divestiture of Interior Products is in the best interests of our shareholders, as well as our Interiors customers and associates. This transaction will substantially accelerate our efforts to improve our balance sheet, reduce net leverage and provide the financial flexibility to pursue strategic growth initiatives in our core exteriors business to drive shareholder value. We are excited about our start to fiscal 2021, especially the growth we are seeing in residential roofing sales. The Interior Products divestiture will allow us to focus entirely on driving growth and profitability in our core exteriors business.”

Added Kevin Penn, a managing director of American Securities: “We are excited to have reached an agreement to acquire Beacon’s Interior Products business. Following the November announcement of our take-private of Foundation Building Materials, this follow-on transaction represents an exciting opportunity to combine two companies that have made customer service their highest priority. The combined company’s expanded geographic presence across the U.S. and Canada will enhance its partnership with customers, vendors, and team members. We look forward to closing the transaction early next year and integrating these two great companies.”

During fiscal 2020, Beacon’s interior products business generated $1 billion in net sales, a net loss of $11 million, and adjusted EBITDA of $73 million.

Goldman Sachs served as sole financial adviser to Beacon, and Sidley Austin LLP and Potter Anderson & Corroon LLP acted as legal advisers to Beacon on the transaction. Weil, Gotshal & Manges LLP served as legal adviser to American Securities on the transaction.