Davey Water Products
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Monday, 07 August 2023 13:03
Waterco buys Davey Water Products in $64.9m deal Featured
By Gordon Peters
Australian-listed global water technology company Waterco has acquired Davey Water Products, a subsidiary of GUD Holdings Limited (GUD), in a deal valued at $64.9 million dollars.
The transaction is expected to be completed at the end of August and Waterco says the aquisition enables the company to expand its reach while providing increased market presence and growth opportunities for shareholders.
“The acquisition aligns with Waterco's long-term strategic vision of becoming a global leader in the water technology industry,” says Waterco Founder, Executive Chairman and Chief Executive Officer, Soon Sinn Goh. “It positions the company for sustainable growth and enables it to take advantage of emerging opportunities in the market.”
Waterco (ASX:WAT) says the acquisition brings together complementary strengths and capabilities that will benefit its customers across various sectors.
“One outcome of the acquisition will be increased share of global water markets across pool and spa, water transfer and water treatment categories,” Goh explains, noting that growth opportunities include leveraging geographical strengths across developing markets in Europe, USA, Africa, and the Middle East.
“Waterco’s extensive distribution into North America and the European Union will further enhance Davey’s pre-existing reach in Europe,” he says. “Another benefit is that both companies will have access to each other’s customer bases as products are complementary.”
Waterco also say the acquisition allows it to expand its presence in new markets and regions where Davey has a strong foothold, such as particular geographic areas of Australia, Europe, Middle East, and the USA - and enables the combined entity to tap into a larger customer base and open up new markets with its combined product portfolio.
Waterco says it will gain access to a broader range of products and technologies including pumps for water transfer, conservation, filtration, and treatment needs, as well as a reputable range of water treatment products, noting that Davey also has unique competitive advantages with its smart connected chlorinators and high-quality pool pumps, and this diversification allows the company to offer a more comprehensive suite of products to its customers, meeting a wider range of needs and requirements.
“The combined expertise of both companies in research and development will accelerate innovation and foster the development of premium differentiated products. Davey has a large team in Australia involved in engineering and product development with a strong focus on water scarcity, energy efficiency, and smart connected products, comments Waterco.
“Shared knowledge and technologies lead to enhanced innovation, allowing for the development of more sophisticated products and services. This enhanced R&D capability will help address emerging market demands, stay ahead of the competition, and improve speed to market.
“As a larger entity, Waterco can benefit from economies of scale in production, distribution, and procurement. Davey has a manufacturing plant based in Scoresby, Victoria, covering 2,700sqm production space and a 4,700 sqm raw materials warehouse. There is also the potential to share global manufacturing partners. This can lead to risk mitigation, spur innovation, boost cost savings, increase efficiency, and improve profitability.
“The acquisition of Davey brings the added benefit of local manufacturing, reducing Waterco’s sole dependence on its manufacturing operations in Malaysia and improving supply chain resilience. Local manufacturing also results in shortened lead times from production to distribution.
“Through the integration of operations, there may be opportunities to streamline operations. This can result in cost savings, improved operational efficiency, and create a mutually beneficial stronger entity.”
Waterco says that Davey, established in 1934, is a well-respected, iconic brand in the Australia and New Zealand markets and will help boost Waterco's global brand reputation in existing and new markets - and strengthening the reputation of the combined companies, makes them a more dependable and trustworthy partner for all water-related requirements.
“Davey possesses unique patents, proprietary technologies, and intellectual property that can be leveraged by Waterco to strengthen its product offerings and gain a competitive edge.
“Waterco has minimal or zero debt before acquiring Davey. Despite the borrowings associated with the acquisition, the debt level remains at a low gearing level, indicating strong financial health. The projected combined revenue for FY24 will surpass $200 million, making Waterco the largest Australian-owned manufacturer of water transfer and water treatment products. The acquisition will increase Waterco's overall financial strength, providing greater stability and flexibility for future growth initiatives.
“The acquisition aligns with Waterco's long-term strategic vision of becoming a global leader in the water technology industry. It positions the company for sustainable growth and enables it to take advantage of emerging opportunities in the market,” notes Waterco
“Overall, the acquisition of Davey Water Products offers a range of strategic benefits that can help Waterco consolidate its position as a market leader and create value for its stakeholders, including employees, customers, and shareholders,” says Goh.
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