Firms: Allens (Reece Limited);
Deal: Reece Limited (Reece) has raised A$600 million.
Value: A$600 million
Area: Finance, corporate
Key players: Allens advised Reece on the capital raising.
The team was led by Allens partner and co-head of Equity Capital Markets team Robert Pick. He was assisted by senior associate Yan-Lin Lee and solicitors Nicholas Twomey and John Jacob.
Deal significance: Reece’s equity raising efforts was to help fund, in part, its planned acquisition of MORSCO Inc for US$1.44 billion (A$1.91 billion).
MORSCO operates throughout 16 American states in the US Sun Belt region. It is a distributor of plumbing, waterworks and heating and cooling equipment (HVAC) products.
A statement from Allens said that the equity raising comprised 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.
Reece is Australia’s largest supplier of plumbing and bathroom products. It is also a major distributor of products to the refrigeration, air conditioning and allied industries, and Australia’s largest distributor of underground water infrastructure products.
According to lead partner Robert Pick, the transaction provided the ASX-listed company with a strategy platform in the Sun Belt region.
“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,” Mr Pick said.
He added that local shareholder response to the equity raising was indicative of the Australian market supporting growth in this way.
“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,” Mr Pick said.