MELBOURNE: Reliance Worldwide Corporation Limited announced Wednesday it has entered a binding scheme implementation deed with a Brookfield Capital Partners LLC affiliate under which Brookfield will acquire 100% of the company’s ordinary shares for US$3.38 cash per share.

The deal values the plumbing and heating products manufacturer at approximately US$2.9 billion enterprise value, or about 12.1 times its fiscal 2026 EBITDA on a post-AASB16 basis.

The cash consideration, now denominated in U.S. dollars, implies a value of A$4.75 per share based on the prevailing AUD/USD exchange rate of 0.7122 on Sept. 15. RWC said the USD denomination aligns with its reporting currency, cash flows and declared dividends.

The offer represents premiums of approximately 31.5%, 32.7% and 43.0% to RWC’s undisturbed last close, three-month VWAP and six-month VWAP, respectively.

Board unanimously recommends approval

RWC’s board unanimously recommended shareholders vote in favor of the scheme, absent a superior proposal and subject to an independent expert concluding the deal is in shareholders’ best interests. Each director intends to vote all shares they hold or control in favor of the scheme.

“The Board is unanimous in its view that this Transaction is in the best interests of RWC shareholders,” Chair Russell Chenu said. “The Board has carefully assessed the proposal on a fundamental valuation basis, considering RWC’s strategic position, long-term growth opportunities and cash generation.”

Chenu said the board also weighed execution risk, macroeconomic and geopolitical conditions against “the certainty of value delivered by the Cash Consideration.”

Go-shop provision through Oct. 15

Under the SID, Brookfield agreed to a “go shop” provision allowing RWC and its advisers until Oct. 15 to solicit alternative proposals, provide due diligence information and negotiate terms. RWC may terminate the SID to pursue a superior proposal, subject to Brookfield’s matching right.

A break fee of US$25.3 million is payable to Brookfield in certain circumstances, with a reciprocal reverse break fee payable to RWC.

Deal terms and conditions

The scheme is subject to conditions including shareholder approval, court and regulatory approvals, and an independent expert’s report concluding the deal is in shareholders’ best interests. Regulatory approvals are required from Australia’s Foreign Investment Review Board and competition regulator, plus authorities in the United States, Germany and Ukraine.

Brookfield agreed to pay a ticking fee of 0.0263 U.S. cents per share per day from April 1, 2027, until implementation if the deal has not closed by March 31, 2027.

Funding includes a US$1.5 billion equity commitment letter from Brookfield Capital Partners VII L.P. and US$1.65 billion in committed debt financing.

Background

The SID follows unsolicited, non-binding proposals from Brookfield in April and May 2026 offering A$4.15, A$4.25 and A$4.50 per share. After an eight-week due diligence period, Brookfield improved its proposal to A$4.75 per share in early August. A four-week exclusivity period followed under a Process Deed signed Aug. 18.

Next steps

A scheme booklet, including the independent expert’s report from Grant Thornton Corporate Finance Pty Ltd, is expected to be sent to shareholders in November. Implementation is targeted for the first quarter of 2027.

Goldman Sachs and Oaktower Partnership are serving as financial advisers to RWC, with Herbert Smith Freehills Kramer as legal adviser.