Watts Water Technologies, Inc. WTS has completed the previously announced acquisition of Apex Valves Limited (Apex). Per the terms of the deal, Watts Water acquired 80% of the outstanding shares of Apex for $22 million.
Apex, a New Zealand-based company, specializes in the design and manufacture of control valves for low and high pressure hot water and filtration systems. The company also produces an extensive range of float and reservoir valves for the agricultural industry. Apex reported annual sales of approximately $12 million in 2014.
Meanwhile, the takeover will allow Watts Water to expand in the Asia-Pacific region, primarily in New Zealand. Watts Water will also purchase the remaining 20% stake in Apex within three years of the deal closure.
In recent years, Watts Water has been benefitting from its ability to grow organically in select market segments and geographic regions and the successful completion of selective acquisitions. Notably, the company has executed 21 acquisitions over the last ten years.
Watts Water’s acquisition strategy mainly aims at acquiring businesses that manufacture preferred brand name or specified products that address water quality, water conservation, water safety, water flow control, HVAC (heating, ventilation and air conditioning) and related complementary markets. Entry into new markets and geographies, increased business with existing customers, new or improved technology and new product launches will drive growth for the company.
In Dec 2014, Watts Water acquired AERCO, a leading provider of commercial high-efficiency boilers, water heaters and heating solutions in North America in a share purchase transaction for $271.5 million. The acquisition will expand Watts Water’s presence in the U.S. non-residential market. AERCO is performing as per expectations, led by strong boiler and aftermarket sales and has recorded year-to-date sales growth of over 10% year over year.
Moreover, the company is poised to benefit from its European transformation program, acquisition activities, growth in the construction markets in the U.S and further share repurchases. However, macroeconomic weakness in Europe, unfavorable foreign currency, impact of restructuring on sales will weigh on Watts Water’s near-term results.
At present, Watts Water carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector include Roper Technologies, Inc. ROP, Avnet, Inc. AVT and CDW Corporation CDW. All these stocks carry a Zacks Rank #2 (Buy).
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