Investing.com – Zurn Water stock (NYSE:ZWS) surged 7% Monday after sewing up a deal to merge with Elkay Manufacturing to focus on expanding market share in the rapidly growing commercial drinking water solutions category.
The transaction values Elkay at $1.56 billion, while Zurn has a market cap of nearly $4 billion after Monday’s gain. Zurn shares have more than halved since their September peak.
The all-stock transaction is expected to close by September. Upon completion, Zurn Water will own around 71% and Elkay shareholders will own the rest of the newly named company – Zurn Elkay Water Solutions. Elkay has been family-owned since it was founded in 1920.
A joint release said the deal will achieve cost savings of $25 million in the very first year of the combination with another $25 million expected to be saved by 2025.
For the year ended December, Zurn net sales rose 22%, to $911 million. Adjusted profit per share was 77 cents compared to 50 cents in 2020.