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Melbourne-based plumbing supplies giant Reliance Worldwide (ASX: RWC) has positioned itself to take on the European market with a $1.2 billion buyout of UK company John Guest Holdings Limited.
Reliance will fund the deal to buy the plastic fittings manufacturer through a $1.1 billion equity offering and the acquisition is expected to be completed by the end of June.
Reliance chief executive officer Heath Sharp says the acquisition strongly aligns with the company's growth strategy and will combine Reliance's strong positions in North America and Asia Pacific with John Guest's strength in the UK and Europe.
"We have previously noted our intention to scale the Reliance business via additional manufacturing and distribution capabilities in the UK and continental Europe. John Guest clearly provides that and more," Sharp says.
"John Guest comes with a long history of innovation and industry leading execution. They have created strong, well respected brands that are highly regarded in their key markets globally.
"We believe that John Guest products can be successfully leveraged through our well established North American and Asia Pacific channel network."
Sharp says they can also use John Guest's distribution channels in the UK and Europe to sell Reliance products and some products from the group's recent acquisition of Holdrite.
Reliance has maintained its full-year earnings guidance range of between $150 million and $155 million for the 2018 financial year, excluding the John Guest transaction costs and it assumes no boost to earnings from the deal.
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