Shares of Zurn Water Solutions Group ZWS, -1.97% rose 3.0% in premarket trading Monday, after the Wisconsin-based water control and safety company announced an agreement to acquire privately held Elkay Manufacturing Co. in a all-stock deal valued at nearly $1.6 billion. Under terms of the deal, Elkay shareholders will receive a total of 52.5 million Zurn Water shares, which based on Friday’s stock closing price of $29.79 is valued at $1.56 billion. Zurn Water’s market capitalization at Friday’s close was $3.75 billion. After the deal is closed, which is expected to occur in the third quarter, Elkay shareholders will own 29% of the combined company. Zurn expects to increase its quarterly dividend after the deal closes. “The combination puts us well on our way to doubling the size of the business over the next couple of years while enhancing our competitive advantage within specified water solutions,” said Zurn Chief Executive Todd Adams. Zurn’s stock has tumbled 20.5% over the past three months through Friday, while the S&P 500 SPX, -1.90% has lost 5.6%.
