Watts Water Technologies Acquires Bradley, Expects EBITDA Margin Accretion By 2027

Watts Water Technologies Inc WTS penned a deal to acquire Bradley Corporation for $303 million.

The transaction value comes to around $268 million after adjusting for the estimated net present value of expected tax benefits of about $35 million.

Bradley is a provider and manufacturer of commercial washroom and emergency safety products across commercial (primarily institutional) and industrial end markets.

The transaction is expected to close in Q4 FY23, upon customary closing conditions, and enhance WTS' exposure to commercial (primarily institutional) and industrial end markets.

"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," said Robert J. Pagano Jr., CEO.

WTS expects the buyout to be modestly accretive to 2024 adjusted EPS due to incremental interest expense and normal purchase accounting adjustments. 

The company projects the deal to benefit adjusted EBITDA margins by 2027.

The company expects to fund the deal through cash and an existing revolving credit facility. As of June 2023, the company held $291.9 million in cash and cash equivalents.

Price Action: WTS shares traded higher by 1.31% at $191.63 on the last check Thursday.