Industrial sector company, GWA Group Limited today acquired all the shares in the New-Zealand based Methven Limited following the approval received by the High Court of New Zealand.
In the announcement dated 10 April 2019, GWA Group Limited (ASX: GWA) stated that it has taken over all the shares in Methven Limited via an implementation of Scheme of Arrangement at a consideration of NZ$1.60 cash per share.
As per the terms of Scheme, the acquisition has led to the delisting of Methven from the NZX Main Board with effect from close of trading today, i.e., 10 April 2019. The current non-executive director of Methven has also resigned with effect from the implementation of the Scheme.
The acquisition of a complementary business is believed to strengthen the GWA Group’s product offering in bathroom and kitchen fixtures across the trans-Tasman market.
GWA Managing Director Tim Salt stated that the combination of GWA and Methven marks the excellent fit of like-minded businesses. It underscores the Methven’s solid presence in the taps and showers category in the Australasian market thereby complementing to the company’s existing business.
The company believes that the transaction would also enhance the regional diversity of its earnings and revenue through leveraging Methven’s presence in overseas markets to bolster growth opportunities aligned to the company’s core focus on water solutions.
Tim Salt added that by bringing these two businesses together, GWA could combine its own and Methven’s talent, know-how and intellectual property to develop new products and solutions aligned to its strategy to deliver further value for its customers and shareholders.
GWA told that the takeover has been funded from its current debt facilities. GWA further advised that it has increased its three-year revolving $225 million debt facility by a further $25 million to provide additional financial flexibility for the group.
During the first half of Fiscal 2019, GWA witnessed a relatively steady market for its largest segment (52% of GWA revenue), Renovations and Replacements, with market activity for home Renovations and Replacements up by approximately 1%. However, new residential construction activity has declined significantly but continued to remain at historically high levels with a robust pipeline of work yet to be completed. Further, on a value of work done basis, the Commercial segment grew strongly by ~7%.
GAW expects 2HFY19 market conditions to be similar to 1HFY19 with Renovation and Replacement segment estimated to remain relatively stable for FY19. For 2HFY19, approximately 74 per cent of US dollar exposure is reportedly hedged to 30 June 2019 at US$77 cents, reflecting the GWA’s foreign exchange strategies to mitigate loss.
In today’s trading session, GWA stock price edged up by 3.106% to last trade at $3.320 on 10 April 2019. The stock has closed at a price to earnings multiple of 8.280x with a market capitalisation of $849.91 million.
Over the past 12 months, the GWA stock price declined by 6.67% despite a positive price change of 11.42% in the past three months.
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