The GWA Group Ltd (ASX: GWA) share price climbed 3% higher yesterday as the company completed its planned acquisition of Mevthen Limited, which has since been delisted from the New Zealand Stock Exchange.
What did GWA announce to the ASX?
GWA advised that the Scheme of Arrangement with Methven has been implemented today, and GWA now owns all of the shares in Methven through a wholly-owned subsidiary.
Methven shareholders were paid NZ$1.60 per share in cash as consideration and the current non-executive directors of Methven have resigned with immediate effect.
GWA management believes the combined entity will create a stronger trans-Tasman business to strengthen its capabilities in bathroom and kitchen fixtures.
Management believes the transaction also enhances the regional diversity of its revenue and earnings by leveraging Methven's presence in international markets to accelerate growth opportunities aligned to its core focus on water solutions.
The acquisition was funded from GWA's existing debt facilities while it has increased its 3-year revolving $225 million debt facility by $25 million to provide additional financial flexibility for the group.
Is GWA in the buy zone?
I think GWA is still a little on the expensive side, given it trades on a price-earnings multiple of 17.6x earnings.
The GWA share price has climbed 21.2% so far this year to $3.32 per share and yet still offers investors a 5.6% dividend yield.
In terms of the Industrials sector, however, I think there may be options with better growth and/or income opportunities for investors.
The Seven Group Holdings Ltd (ASX: SVW) share price is up more than 30% in 2019 largely due to a strong appreciation in the value of its Beach Energy Ltd (ASX: BPT) majority investment.
The IPH Limited (ASX: IPH) share price has also been soaring in 2019, rocketing 28.8% higher amid its ongoing battle to merge with Xenith IP Group Ltd (ASX: XIP).
For those looking for a more high-risk, high-reward play, this top-rated stock in a booming $22 billion industry could have a spot in your growth portfolio.
