Watts Water Technologies Inc. to Acquire Bradley Corporation
August 30 2023 - 4:59PM
Business Wire
- Enhances diversification of water solutions portfolio through
acquisition of complementary strategic platform that provides the
opportunity for further growth
- Increases exposure to commercial (primarily institutional) and
industrial end markets
- Supports value creation through greater scale and meaningful
run-rate cost synergies
Watts Water Technologies, Inc., (NYSE: WTS) (“Watts”) – through
its subsidiaries, one of the world’s leading manufacturers and
providers of plumbing, heating and water quality products and
solutions – today announced that it has entered into a definitive
agreement to acquire Bradley Corporation (“Bradley”) for $303
million, subject to customary adjustments. The net transaction
value is approximately $268 million after adjusting for the
estimated net present value of expected tax benefits of
approximately $35 million. The transaction will be funded through
cash on hand and the remainder from Watts’ existing revolving
credit facility. The transaction is subject to customary closing
conditions and necessary regulatory approvals and is expected to
close in the fourth quarter of 2023.
Bradley is a trusted provider and manufacturer of commercial
washroom and emergency safety products serving commercial
(primarily institutional) and industrial end markets for over 100
years. The company offers a comprehensive product portfolio that
includes plumbing fixtures, washroom accessories and emergency
safety products to a diverse customer base. Bradley has annual net
sales of approximately $200 million.
Chief Executive Officer Robert J. Pagano Jr. commented, “Today’s
strategic acquisition delivers on our mission to improve comfort,
safety and quality of life for people around the world. Bradley’s
complementary portfolio will enable us to provide our customers
with innovative water solutions, as it adds front-of-the-wall
applications to our differentiated back-of-the-wall portfolio. We
believe we can leverage the combined strengths of the two
companies’ sales networks and channel relationships to facilitate
cross selling and accelerate growth. With expanded end market
access, increased product diversification, a strengthened
go-to-market position and our highly experienced leadership team,
Watts is well positioned to capture run-rate cost synergies,
capitalize on growth opportunities and drive value creation.”
Compelling Acquisition Expected to Yield Meaningful Strategic
and Financial Benefits
- Extends product portfolio and market leadership:
Bradley’s innovative front-of-the-wall portfolio includes a full
suite of high-quality, specified and code-driven products.
- Increases end market exposure to secular growth themes:
Strategically expands Watts’ position in commercial (primarily
institutional) and industrial markets. This is expected to
accelerate growth as these markets continue to benefit from
long-term secular trends such as water conservation, safety and
regulation and energy efficiency.
- Leverages the One Watts Performance System and connected
strategy: Achieves meaningful cost synergies through commercial
and operational initiatives in addition to global sourcing
savings.
- Enhances competitive positioning: Combines two leading
brand portfolios with proven, longstanding track records of
delivering high-quality, innovative products and solutions.
- Brings highly experienced management team and skilled work
force: Adds strong leadership with deep industry expertise,
including Bryan Mullett, Bradley’s Chairman and CEO, who will join
Watts as President of Bradley, a new platform within Watts’
Americas region.
- Accretive transaction providing long-term financial
benefits: The transaction is expected to be modestly accretive
to Adjusted EPS in 2024 due to incremental interest expense and
normal purchase accounting adjustments. The transaction value, net
of the estimated tax benefit, represents less than 8.0x forecasted
2023 proforma Adjusted EBITDA after factoring in expected run-rate
cost synergies. Adjusted EBITDA margins expected to be accretive by
2027.
Bryan Mullett said, “We are very pleased to have Bradley join
Watts and see tremendous opportunity for incremental value
creation. This will help us capture the benefits from our diverse
range of innovative and customized front-of-the-wall solutions and
Watts’ global reach, broad product portfolio and operational
strength. I am looking forward to joining the management team to
drive continued growth and support the integration of these two
companies that have a combined 250-year heritage of experience and
endurance in sustainable water products and solutions.”
Pagano concluded, “Watts and Bradley complement each other well
in terms of culture and shared vision, with proven track records of
delivering innovative, high-quality products and solutions along
with outstanding customer service. We look forward to welcoming the
Bradley team to Watts Water Technologies.”
Additional information regarding the transaction will be
discussed during Watts third quarter earnings call in early
November 2023.
About Watts Water Technologies, Inc.
Watts Water Technologies, Inc., through its family of companies,
is a global manufacturer headquartered in the USA that provides one
of the broadest plumbing, heating and water quality product lines
in the world. Watts Water companies and brands offer innovative
plumbing, heating and water quality solutions to control the
efficiency, safety, and quality of water within commercial,
residential and industrial applications. For more information,
visit www.watts.com.
About Bradley
For over 100 years, Bradley has created the most complete and
advanced commercial washrooms and comprehensive solutions that make
industrial environments safe. Bradley is the industry's leading
source for multi-function handwashing and drying fixtures,
accessories, partitions and solid plastic lockers, as well as
emergency safety fixtures and electric tankless heaters for
industrial applications. Headquartered in Menomonee Falls, WI, USA,
Bradley serves commercial/institutional and industrial building
markets. For more information visit www.bradleycorp.com
Forward-Looking Statements
In connection with the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, Watts provides the
following cautionary statement: This news release contains various
forward-looking statements based on current expectations about
important economic, political, and technological factors, among
others, and are subject to risks and uncertainties, which could
cause the actual results or events to differ materially from those
set forth in or implied by the forward-looking statements and
related assumptions. These include statements regarding estimates
of future earnings and cash flows and expectations as to the
closing of the transaction. Other uncertainties include, but are
not limited to, general economic conditions, supply chain
conditions and any related impact on costs and availability of
materials, the ability to obtain regulatory approval without
unexpected delays or conditions, integration of the acquired
business in a timely and cost-effective manner, retention of
supplier and customer relationships and key employees, and the
ability to achieve synergies and cost savings in the amounts and
within the time frames currently anticipated. Other risks and
uncertainties that may materially affect Watts are described from
time to time in its reports filed with the Securities and Exchange
Commission, including Forms 10-K, 10-Q, and 8-K. Except to the
extent required by law, Watts does not undertake and specifically
declines any obligation to review or update any forward looking
statements or to publicly announce the results of any revisions to
any of such statements to reflect future events or developments or
otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20230830256856/en/
Watts Water Technologies, Inc. Diane McClintock Senior Vice
President FP&A and Investor Relations Telephone: 978-689-6153
Email: investorrelations@wattswater.com
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