Watts Water (WTS) to Acquire Josam Company to Boost Growth
Watts Water Technologies WTS recently announced that it entered into a definitive agreement to acquire Josam Company. Subject to customary closing conditions, the transaction is expected to close in January 2024.
WTS has not divulged any financial details of the deal at present but added that it will provide more information regarding the same at its fourth-quarter 2023 earnings call in February 2024.
Headquartered in Michigan City, IN, Josam specializes in designing and manufacturing drainage and plumbing products. It has a varied customer base serving commercial, industrial and multi-family end markets. The company’s annualized sales are nearly $35 million, per WTS.
With the acquisition of Josam, management added that it will be able to offer its clients a wide array of capabilities and solutions. Josam’s complementary sales networks and channel relationships are expected to drive future growth and provide cross-selling opportunities for WTS.
Watts Water Technologies, Inc. Price and Consensus
Watts Water Technologies, Inc. price-consensus-chart | Watts Water Technologies, Inc. Quote
Strategic acquisitions have played a pivotal role in driving top-line growth. In October, WTS completed the acquisition of Bradley Corporation for $303 million. Bradley Corporation’s high-quality and code-driven products is likely to complement Watts' existing portfolio and enable the provision of innovative water solutions. Both companies aim to leverage 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.
In April 2023, the company completed the acquisition of Enware Australia to expand its global footprint. The acquisition will allow WTS to expand its product offerings into new geographies.
WTS designs, manufactures and sells various water safety and flow control products for the water quality, water conservation, water safety and water flow control markets. Watts Water’s performance is gaining from strengthening momentum in the Asia-Pacific region as well as healthy growth in Europe. Continued investment in smart and connected-enabled products bodes well. The company raised its adjusted operating margin outlook for 2023, driven by strong third-quarter results.
However, WTS’ performance in Europe is likely to be affected due to weakness in the residential market coupled with decreasing Eurozone PMI and the potential impact of changes to the energy incentive program in Italy in the near term. Also, rising interest rates and lending tightening on new construction are concerns.
At present, Watts Water carries a Zacks Rank #2 (Buy).
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