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Allens advises Reece on capital raising to fund MORSCO acquisition

9 May 2018

Allens has advised ASX-listed Reece Limited on its A$600 million equity raising to partially fund its acquisition of MORSCO Inc. for US$1.44 billion (A$1.91 billion).

Reece is Australia’s largest supplier of plumbing and bathroom products, Australia’s largest distributor of products to the refrigeration, air conditioning and allied industries, and Australia’s largest distributor of underground water infrastructure products.

MORSCO is a leading US distributor of plumbing, waterworks and heating and cooling equipment (HVAC) products operating in 16 states across the Sun Belt region of the US.

The equity raising comprises a fully underwritten 1 for 11 pro-rata accelerated non-renounceable Entitlement Offer to raise A$421 million and a fully underwritten institutional Placement to raise A$179 million.

The Allens team was led by Partner and Co-Head of Allens' Equity Capital Markets team Robert Pick (view CV), and also included Senior Associate Yan-Lin Lee and Lawyers Nicholas Twomey and John Jacob.

'We are proud to have worked with the Reece team on this important transaction, which provides Reece with a strategic platform in the fast-growing US Sun Belt region. Reece is an iconic Australian business with a long history of creating value for its shareholders,' Robert said.

'The acquisition of MORSCO provides Reece with exposure to the US market, which is forecast to grow at twice the rate of the Australian market and it is currently about eight times the size.'

'The positive response from investors to the equity raising – with the placement clearing significantly above the underwritten floor price and investors taking up over 99 per cent of their entitlements under the institutional component of the entitlement offer – shows that the Australian market continues to support companies who are looking to raise capital to drive growth through acquisition.'

Allens legal team Robert Pick (Partner – Corporate, Melbourne), Yan-Lin Lee (Senior Associate – Corporate, Melbourne), Nicholas Twomey (Lawyer – Corporate, Melbourne) and John Jacob (Lawyer – Corporate, Melbourne)

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Notes for editors.

Allens is a commercial law firm working throughout Australia and Asia. Through its integrated alliance with Linklaters it provides clients access to 40 offices in 28 countries around the world.