There are few shares on the ASX that have done as well on the ASX over the past five years as Reece Ltd (ASX: REH), its share price has risen by 163%.
It has done remarkably well thanks to a long-term mindset from management, with the Wilson family running the company for decades.
Everyone knows it as a leader of plumbing and hardware stores, but it now also generates revenue from HVAC-R, civil, irrigation and pools.
Last month the company announced that it would be acquiring MORSCO Inc in the US for $1.91 billion. It's a distributor of plumbing, waterworks and heating & cool equipment in 16 US states. Reece expects that this will deliver mid-high single digit EPS accretion in the first year.
Today, Reece announced another acquisition, although this one is a lot smaller.
It's acquiring New Zealand plumbing business Edward Gibbon and the Zip Plumbing Plus stores in Christchurch and Takanini. Edward Gibbon has 10 stores across the two Kiwi islands.
New Zealand has a $7.1 billion hardware and building supplies industry, so this shouldn't be thought of as a small opportunity for Reece.
CEO and Managing Director Peter Wilson said "The acquisition extends Reece Group's New Zealand branch network from 18 to 30 stores that supply trade and retail customers with plumbing, bathroom and HVAC-R products and equipment."
Under the agreement, the existing management will remain in place whilst Reece will implement any logical synergies between the businesses in the future.
Foolish takeaway
The deal is likely to complete near the end of July, after the MORSCO acquisition is due for completion. This seems like a decent bolt-on acquisition for Reece and allows it to expand in the small, yet important, market of New Zealand.
The large US acquisition makes me a bit nervous, but it also offers a lot of growth potential. I'd be happy to make a small purchase at the current price and buy more on any price weakness.
