Reliance reaffirms backing for Brookfield takeover at US$3.38 a share after no rival bids emerge
Key Facts
Reliance Worldwide's board unanimously reaffirmed its recommendation in favour of Brookfield's takeover after the search for alternative buyers ended without any offers, according to the company's statement on the conclusion of the process. The binding agreement signed on 16 September 2026 provides for the acquisition of 100% of the ordinary shares for US$3.38 a share in cash through a court-approved scheme of arrangement. The deal implies an enterprise value of about US$2.9 billion on an accounting basis that includes lease liabilities. Reliance said the search for alternatives included an international marketing process targeting strategic and financial buyers, none of which submitted an offer. Chairman Russell Chenu said in the statement: "The cash consideration offered by Brookfield is particularly attractive given the certainty of value it provides to Reliance shareholders."
The agreement fixes the consideration in U.S. dollars, while its Australian-dollar equivalent fluctuates with the exchange rate. Reliance said it chose the U.S. currency to align the consideration with the currency of its financial reporting, cash flows and declared dividends. Shareholders can elect to receive their proceeds in U.S. dollars or Australian dollars under the deal's terms. Using an exchange rate of US$0.6947 per Australian dollar on 16 October 2026, the consideration equated to A$4.87 a share, according to the statement marking the end of the search for alternatives. Proceeds for those choosing Australian dollars will be determined by the exchange rate shortly before implementation, making the timing of conversion a factor in the consideration's local-currency value.
The binding agreement followed a series of preliminary non-binding proposals submitted by Brookfield during April and May 2026, according to Reliance's disclosure of the improved offer in August. Those proposals rose from A$4.15 to A$4.25, then to A$4.50 a share. The company estimated the enterprise value of the improved offer announced in August at about A$4.1 billion. It said the improved offer represented a premium of 31.6% to the stock's last closing price before the original announcement. The reference closing price used in this comparison was A$3.61 a share on 17 August 2026.
Reliance Worldwide manufactures plumbing and water control solutions, according to the company's description of its business. Its products are used in homes and commercial buildings around the world. In the financial year ended June 2026, the company reported net sales of US$1,305.6 million, down 0.7% from the corresponding period, according to its annual results announcement. Adjusted net profit after tax fell 15.3% to US$125.1 million, a steeper decline than in sales. Reliance shares rose more than 7% in early trading on 16 September, the day the binding agreement was announced, according to Reuters. The shares traded at A$4.65 during that session.
Although the marketing process ended without an alternative offer, exceptions relating to the board's fiduciary duties remain in effect under the agreement, according to the company's statement. These exceptions allow the board to consider a new offer that could become superior to Brookfield's. Brookfield, in turn, retains the right to match that offer under the contractual arrangements. The agreement also includes a US$25.3 million break fee payable by Reliance to Brookfield in contractually specified circumstances. It also imposes a reverse break fee of the same amount payable by Brookfield to Reliance in the stipulated circumstances, extending potential financial obligations to both parties to the deal.
The board appointed Grant Thornton Corporate Finance as an independent expert to assess whether the deal is in shareholders' best interests. Completion of the takeover remains conditional on the independent expert continuing to conclude that it is in their best interests, according to the company's disclosure. Conditions also include shareholder, court and regulatory approvals. The updated indicative timetable sets early November 2026 for dispatch of the scheme booklet to shareholders. Their meeting to vote on the scheme is scheduled for early to mid-December. The company is targeting implementation in late December 2026, subject to satisfaction of the required conditions.