- Waterco (WAT) has entered an agreement to purchase Automated Pool Products (APP)
- The company’s business purchase is a part of its strategy to increase its market share in certain Australian states
- Upon completion of the sale, Waterco will pay APP approximately $3.085 million, funded by bank loans and working capital
- The sale is expected to complete by June 30, 2020, and will add over $300,000 to Waterco’s EBITDA in 2021
- Waterco remains in the grey with shares trading for $2.25 each
Waterco (WAT) has entered an agreement to purchase Automated Pool Products (APP).
APP is a leading distributor of hardware for the domestic pool market. The business provides a variety of such products through a network of independent shops and dealers.
APP seems a perfect acquisition for Waterco, which manufactures and distributes products for swimming pools, spas, and water treatment. These include filters, pumps, heating, sanitisation, manuals, and miscellaneous spare parts.
In addition to such equipment and accessories, the company also provides solar heating systems and pool chemicals.
Waterco entered the agreement to purchase APP as part of its strategy to increase its market share in Australia. In particular, the company hopes to make a splash in states like Western Australia and Queensland.
Upon completion of the sale, Waterco will pay APP a purchase price of approximately $3.085 million, including inventory. This price will be subject to certain typical adjustments, and will depend on the achievement of future earning targets.
The companies will need to meet all the terms of the agreement, satisfy all due diligence on APP’s business, and gain all necessary approvals. Waterco expects that, once the requirements are satisfied, the sale of APP will be complete by June 30 2020.
The addition of APP’s business will add over $300,000 to Waterco’s earnings before interest, tax, depreciation, and amortisation for the 2021 financial year. The purchase will also provide the company with incremental earnings, going further forward into the future.
Waterco remains in the grey with shares trading for $2.25 each at 10:09 am AEST.