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Watts Water (WTS) to Acquire Bradley Corporation for $303M

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Watts Water Technologies (WTS - Free Report) recently made a significant move by announcing its plans to acquire Bradley Corporation for $303 million, which is subject to customary adjustments. The expected timeline for the deal's closure is the fourth quarter of 2023.

The net value of the transaction stands at around $268 million after accounting for expected tax benefits. The funding for this deal will come from Watts' existing revolving credit facility and its available cash reserves.

Bradley Corporation’s high-quality and code-driven products are anticipated to complement Watts' existing portfolio and enable the provision of innovative water solutions. Both companies aim to leverage their combined sales networks for cross-selling opportunities and accelerated growth. Also, the acquisition strategically broadens Watts' reach in commercial and industrial markets, aligning with long-term trends such as water conservation, safety, regulation, and energy efficiency.

The integration of the One Watts Performance System and connected strategies is anticipated to result in cost synergies through operational improvements and global sourcing savings. Both companies aim to fortify their positions in delivering innovative, high-quality products and solutions.

However, as the transaction may lead to additional interest expenses and standard purchase accounting adjustments, it is expected to be incrementally accretive to adjusted earnings per share (EPS) in 2024. The overall transaction value, net of estimated tax benefits, signifies a meaningful investment in Watts' future growth and success. 

Overall, the acquisition of Bradley Corporation positions Watts for greater competitiveness and innovation in the water solutions market. Watts designs, manufactures and sells various water safety and flow control products for water quality, water conservation, water safety, and water flow control markets.

Watts is likely to benefit from continued investment in smart and connected-enabled products, which are likely to provide it with further differentiation in the marketplace. It is focused on enhancing organic growth, driving margin expansion and reinvesting in productivity initiatives.

WTS currently carries a Zacks Rank #2 (Buy). Shares of the company have gained 36.9% compared with the sub-industry’s growth of 31.2% in the past year.

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