Following due diligence, Brookfield Capital Partners and Reliance RWC have entered into a scheme implementation deed for Brookfield to acquire 100% of Reliance for USD 3.38 cash per share. Reliance may solicit takeover proposals from other parties until Oct. 15. 2026.

Why it matters: We think Reliance is likely to be taken over early next year. Directors intend to recommend voting in favor of Brookfield’s offer, assuming the independent expert supports it, and have a month to try to find a better offer elsewhere.

The bottom line: We lower our fair value estimate to AUD 5.00 per share for narrow-moat Reliance. We now assume a 75% probability the deal proceeds, from 50% earlier, given the progression to the scheme implementation deed. If it does not proceed, we would revert to our stand-alone valuation of AUD 5.70 per share.

  • Shares are up about 4% and trading close to the offer price. We think the market expects the deal to proceed. Regulatory approvals are outstanding, including the Foreign Investment Review Board and the Australian Competition and Consumer Commission, as well as in Ukraine and Germany.
  • We think the offer price is opportunistic, taking advantage of Reliance’s weak share price; it undervalues Reliance by 17% from our stand-alone valuation. Reliance’s shares have been hit by short-term headwinds including tariffs, copper prices, the Iran war, and construction weakness.

Coming up: The proposal is now being referenced in USD, consistent with Reliance’s reporting currency. It is worth AUD 4.75 per share, based on an AUD/USD exchange rate of 0.71 at Sept. 15, 2026. If the deal completes, shareholders can elect to be paid in either currency.

  • Shareholders do not need to take any action at this stage. A scheme implementation booklet will be sent to shareholders likely in November, prior to the scheme meeting, and we will provide a recommendation on how to vote around then.

Reliance Worldwide Corporation

Reliance manufactures behind-the-wall plumbing products, which include fittings, pipes, valves, fluid dispensers, pipe systems, and appliance connectors. Its main segment is the US, which comprises about two-thirds of our midcycle EBITDA estimates. Other segments include EMEA and Asia-Pacific, which contribute about 15% and 20%, respectively, of our midcycle EBITDA estimates. The firm is best known for its push-to-connect products, including the brands SharkBite in the US and John Guest in the United Kingdom. Reliance’s primary target segment is the do-it-yourself market.

The firm’s strategy is to expand its share of the push-to-connect fittings category. As a first mover, its SharkBite product range has about 85% market share in the US within the push-to-connect category and is the only brand sold at the two largest home retailers, Lowe’s and Home Depot. Although patents have expired for the original SharkBite and John Guest push-to-connect products, Reliance continues to innovate and has recently introduced SharkBite Max. Marketed as stronger, we think the SharkBite Max can command a price premium over the original product and other push-to-connect brands.

A secondary strategy is to leverage brand awareness and reputation, in addition to relationships with large retailers and wholesalers, to sell products complementary to the firm’s core range. New products are mostly acquired via strategic bolt-on acquisitions including Holman (2024), EZFlo (2021), John Guest (2018), and HoldRite (2017).

Bulls say

  • We estimate that about three-fourths of revenue is from the repair, renovation, and improvement category, which is less exposed to cyclicality in the housing market.
  • Greater adoption of Reliance’s push-to-connect fittings underpins market share gains and higher profit margins.
  • Innovative products such as EvoPex and SharkBite Max will facilitate increased penetration of push-to-connect fittings in the new-construction plumbing market, expanding underlying demand for Reliance’s products.

Bears say

  • Higher interest rates leading to a protracted downturn in housing activity in all of Reliance’s operating regions could weigh on group earnings.
  • Patents on Reliance’s original push-to-connect products have expired, increasing competition through the proliferation of look-alike products.
  • Reliance has very high customer concentration, with Home Depot and Lowe’s representing most of the US sales. Adverse developments in either relationship would have a material impact on sales.

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