Reliance Worldwide Corporation Ltd [ASX: RWC] saw their share price rise almost 23% yesterday — the company’s biggest one day increase since listing on the ASX in 2016.
RWC’s shares are currently trading at $5.60, up from the close price prior to the trading halt of $4.42, on Wednesday 23 May.
The Australian-based company is a leading global manufacturer and supplier of high quality, reliable and premium branded water flow and control products and solutions for the plumbing industry.
Why did Reliance Worldwide’s share price increase?
The increase in share price came after Reliance announced the potential acquisition of UK based company, John Guest Holdings Limited.
John Guest is a leader in plastic PTC fittings with products distributed worldwide. Reliance believe that John Guest will complement their products and help expand their market presence, particularly in Europe.
The offer is an unconditional agreement to acquire all of the shares of John Guest Holdings for $1.22 billion.
The integration of the two companies is expected to deliver an additional $20 million EBITDA per annum, with cost reductions from business integration and improved operating efficiency.
Heath Sharp, RWC Chief Executive Officer, said in relation to the acquisition:
‘We are excited about the opportunity to join these two great companies. 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…’
What can we expect to see next for Reliance Worldwide?
Shareholders with a registered address in Australia or New Zealand will be invited to participate in the Retail Entitlement Offer, which is scheduled for Thursday, 31 May and closes Thursday, 14 June at 5pm.
It sounds like this acquisition could be very beneficial for Reliance Worldwide. We will just have to wait and see how this potential joint venture pans out.
For Markets & Money
PS: Our analyst Vern Gowdie believes that we’re about to see a catastrophic market crash. Vern says ‘Australian stocks could fall as much as 90%’. If you’re interested in finding out more about which Aussie stocks could be the most vulnerable, check out his free report ‘Sell These Five ‘Fatal’ Stocks Now’.