Brookfield bids A$4.1bn for Reliance Worldwide

Brookfield Asset Management (BAM), through Brookfield Capital Partners LLC, has offered to acquire Reliance Worldwide Corp. in an all-cash transaction valuing the Australian plumbing supplies group at about A$4.1 billion, or roughly $2.9 billion. The proposal prices Reliance Worldwide shares at A$4.75 each. This valuation represents a 32% premium to the company’s closing share price on the preceding Monday, giving existing shareholders the opportunity to exit at a materially higher price than the recent market level.

The offer is structured as a takeover bid and is currently non-binding, with the parties working to convert it into a binding proposal. The focus over the coming weeks will be on confirmatory due diligence and finalising transaction documentation needed to advance the deal toward completion.

Reliance Worldwide disclosed that Brookfield’s current A$4.75 per share proposal follows a series of unsolicited, non-binding, indicative offers made earlier in the year. Those prior approaches were at A$4.15, A$4.25 and A$4.50 per share, respectively. The latest bid therefore reflects a step-up from earlier price indications as discussions between the two parties have progressed.

These earlier offers were also non-binding and indicative, meaning they did not commit Brookfield to proceed to a transaction. The move to a higher A$4.75 proposal signals an increased valuation Brookfield is prepared to put forward as part of its effort to secure agreement on a deal.

To facilitate negotiations, Reliance Worldwide has entered into a process deed with Brookfield that sets out the framework for engagement over the near term. A key feature of this deed is a four-week exclusivity period running from August 17 to September 15. During this period, Reliance Worldwide is restricted from soliciting, encouraging or entering discussions regarding alternative or competing proposals.

The process deed provides Brookfield with a defined window to complete confirmatory due diligence and work with Reliance Worldwide on the terms of a binding agreement. While the proposal remains subject to these steps and any required approvals, the deed outlines how the parties intend to advance the transaction in an orderly manner.

Reliance Worldwide has appointed Goldman Sachs (GS) and Oaktower Partnership as its financial advisers in connection with Brookfield’s proposal. These advisers are expected to support the company’s assessment of the offer terms and the broader strategic and financial implications for shareholders.

Over the four-week exclusivity period, the parties aim to convert the current proposal into a binding transaction. If a binding agreement is reached, it would pave the way for a formal acquisition process under which Reliance Worldwide shareholders would receive A$4.75 in cash per share, subject to all customary conditions being satisfied.