Melbourne-based Reece Group has further expanded in the US with the $A220 million acquisition of a Southern California plumbing supply wholesaler, Todd Pipe & Supply.
The deal will add outlets to MORSCO, which Reece bought 15 months ago for $A1.9 billion.
Reece said in a statement to the ASX yesterday that Todd Pipe “is a strong and well-known business, with six branches in attractive growth areas.”
“The acquisition will complement MORSCO’s existing presence and bring its total number of locations in Southern California to 23. Todd Pipe brings with it a loyal customer base and a team of experienced leaders. The acquisition takes MORSCO’s total branch network in the US to 181,” Reece said.
Reece will pay $US122 million upfront for Todd, with a further $US38 million deferred until the end of December 2021 and subject to achieving certain milestones.
Reece said Todd Pipe earned an adjusted EBITDA of $US16.4 million LTM to March 2019. The existing Todd Pipe management team will join MORSCO and play an important role in the direction of the business and growth in Southern California.
Reece CEO, Peter Wilson said in a statement yesterday, “Todd Pipe is an example of us acting on opportunities to consolidate the fragmented plumbing market in the US Sun-Belt region. We acquired MORSCO last year to create a growth platform for the Group, and we will do this through organic, and considered in-organic opportunities as they arise.”
The acquisition will be cash and debt-funded. The transaction is subject to customary closing conditions and is expected to be completed on 1 October 2019.
Reece shares rose 0.1% to $10.04.
