Franklin Electric acquires U.S. ground water distribution companies
By Ground Water Canada
By Ground Water Canada
Fort Wayne, IN – Franklin Electric will acquire controlling interests in three U.S. distributors: 2M Company of Billings, Mont., Western Hydro Holding Corporation of Hayward, Calif., and Drillers Service of Hickory, N.C., the company said in a news release.
The acquisition cost is approximately $89 million in the aggregate, which includes assumed debt. The 2M and Western Hydro transactions have closed and Franklin Electric expects the DSI acquisition to close before the end of the second quarter 2017.
“The specialized groundwater distribution channel in the U.S. through which we sell our products is an important element in the ultimate sale, support and specification to the installing contractors,” said Gregg Sengstack, Franklin Electric’s chairman and chief executive officer, in the release. “Working in partnership with our distributors, Franklin Electric has developed a broad array of products and systems solutions that will only grow as regulatory and efficiency demands increase in North America.”
“Over the last several years, Franklin Electric has worked closely with the management of these three companies and the leadership of other strategic distribution partners. These relationships have provided us with insight into and appreciation for the value proposition offered by water systems distribution. By acquiring Western Hydro, 2M and DSI, including the stand-alone 2M/DSI joint venture, Franklin Electric is forward integrating into this channel with four strong, customer focused organizations competing in the market, increasing our commitment to the entire channel and the installing contractor base. Our new distribution entity, with a national footprint of sixty locations and nearly 500 employees, will be the largest in the industry.”
Franklin Electric will operate the acquired distributors in an entity named Headwater Companies, LLC. The company has named DeLancey W. Davis, a 25-year industry veteran including the last eleven as an executive officer of Franklin Electric, as president of Headwater Companies. Davis will have overall leadership responsibility for the new segment and will begin to immediately integrate the three acquisitions into a single operating unit.
The earnings from the acquired companies are expected to add 12 to 14 cents to Franklin Electric’s 2018 adjusted earnings per share.