The Reliance Worldwide (ASX:RWC) share price up after asset purchase

Things are flowing well for the plumbing manufacturer and supplies company today.
The post The Reliance Worldwide (ASX:RWC) share price up after asset purchase appeared first on The Motley Fool Australia. –

The Reliance Worldwide Corporation Ltd (ASX: RWC) share price has started this morning’s session in the green.

Reliance confirmed in an announcement this morning that it will acquire the business assets of LCL Pty Ltd.

Let’s take a closer look at what was released this morning.

Quick recap on Reliance

Reliance is in the business of manufacturing and selling plumbing products.

Its key markets are North America, Europe and Australasia, where it has a meaningful footprint.

At the time of writing, Reliance has a market capitalisation of $4.1 billion.

The LCL asset acquisition

LCL is a Melbourne based producer that “processes both new and recycled non-ferrous materials to produce a range of brass copper alloys”.

Reliance announced it would acquire LCL’s business assets for $37 million.

The company states “adjusted average earnings before interest, tax, depreciation and amortisation (EBITDA) for LCL over FY 2019 and FY 2021 is $7.1 million”.

According to Reliance, it accounts for more than 90% of LCL’s revenue.

The transaction will close on 31 August and adjustments for working capital may be embedded into the final sale price.

It is expected that most of LCL’s employees will transition over to Reliance’s books after the sale is finalised.

Reliance Worldwide chief executive Heath Sharp stated:

With this acquisition, RWC will secure a favourable long‐term cost position for its brass rod requirements in Australia. The co‐location of our brass forging operations with LCL’s brass production facility at Moorabbin will enable us to optimise materials handling and manufacturing efficiencies. This acquisition will secure control of a critical piece of our manufacturing supply chain.

Reliance stated it will fund the acquisition using existing debt and credit facilities.

Investors seem to welcome the announcement, as Reliance shares are now trading at $5.25, up almost 1% on yesterday’s closing price.

Reliance share price snapshot

The Reliance share price has posted a year to date return of 29%, extending the previous 12 month’s return of 84%.

Both of these returns have outpaced the S&P/ASX 200 Index (ASX: XJO)’s return of ~21% over the previous year.

Reliance shares are trading around 3.8% below their 52-week high of $5.46.

The post The Reliance Worldwide (ASX:RWC) share price up after asset purchase appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

More reading

ASX 200 midday update: Oil Search rejects Santos merger proposal, Afterpay rolls out Money app

Why the Locality Planning Energy (ASX:LPE) share price is up 47% today
Do ASX 200 banks share same BNPL ambitions as Westpac (ASX: WBC)?
COVID-19 lockdowns and the Sydney Airport (ASX:SYD) share price
Afterpay (ASX:APT) share price is higher despite the sharp ASX 200 selloff

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Reliance Worldwide Corporation Limited. The Motley Fool Australia has recommended Reliance Worldwide Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!