TRG | The Bottom Line – 8/21

TRG has continued to track the consolidation wave in the building products space in the past few years, with the participants being strategics and financial buyers. The consolidation has been across all parts of the value chain. The latest large-scale example of this is Brookfield Capital acquiring Reliance Worldwide (RWC: ASX), a large global plumbing producer with over 60% of sales from the Americas.  Brookfield raised its bid multiple times before getting it across the line at $4B, or above 12x EV/EBITDA. We believe this speaks to how enticing the plumbing companies are (for their many-fold qualities – brands with pricing power, broad distribution, high margins, to name a few). As the chart shows, multiple plumbing-related TRG companies (Masco, Fortune, Ferguson) carry double-digit multiples, although none of them are pure-plays. Zurn is included in the chart for its comparability to Reliance, Masco, and Fortune, although Zurn has more commercial exposure and sells through Ferguson.

Also this week, Kathryn Thompson was a guest on Bloomberg Businessweek Daily to talk about the AI Data Center Buildout. Check it out here.

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