Reece Group, Australia’s largest plumbing and bathroom supplies company, has announced that it has agreed to acquire US-based commercial and residential plumbing distributor MORSCO in a deal valued at AUD$1.9bn.
By acquiring the Texas-based firm, Reece Group will gain access to the USD$32bn-valued US plumbing market, significantly accelerating the firm’s global expansion.
“We're excited to be entering a long-term partnership with MORSCO to invest in the growth of their business in the US market,” says CEO Peter Wilson.
“It's a market that's forecast to grow at twice the rate of the Australian market and it is currently about eight times the size.”
MORSCO operates within 16 states, operating more than 171 branches and 2,500 employees across its network.
According to Reuters, the deal is only the 10th time in the past decade that an Australian company has acquired a large US rival within the same industry.
Reece Group will fund the acquisition with a $560mn equity finance raising, valued at AUD$9.30 per share – a 13.5% discount compared to Reece Group’s unaffected share price, $300mn from the Wilson family, and $1.14bn in a seven-year secured credit loan.
Reece Group intends to operate MORSCO as a separate business from its existing Australian and New Zealand unit.