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DALLAS - CSW Industrials, Inc. (NYSE:CSWI) announced Wednesday it has entered into a definitive agreement to acquire Motors & Armatures Parts (MARS Parts) for $650 million in cash, with an additional potential $20 million earn-out based on future revenue targets.
The acquisition will expand CSW’s product portfolio in the heating, ventilation, air conditioning, and refrigeration (HVAC/R) market by adding motors, capacitors, and other electrical components used in repairs and replacements.
The purchase price represents approximately 12.5 times MARS Parts’ trailing twelve-month adjusted EBITDA of $51.8 million, or 10.5 times when factoring in identified synergies. CSW expects the transaction to be immediately accretive to earnings and projects the acquired business will achieve an EBITDA margin of at least 30% within 12 months of closing. CSWI’s own EBITDA stands at $230.9 million, with a healthy revenue growth of 12.27% over the last twelve months. InvestingPro data shows the stock is currently trading near its Fair Value, suggesting reasonable acquisition timing.
"This acquisition will expand our existing HVAC/R product portfolio with highly complementary offerings and enhance our value proposition in the HVAC/R end market," said Joseph B. Armes, Chairman, President, and CEO of CSW Industrials.
MARS Parts is described as one of North America’s largest distributors of HVAC/R parts and supplies, with a product mix focused more heavily on repair versus replacement. The acquisition excludes the equipment segment of Motors & Armatures’ business.
CSW plans to fund the transaction through a combination of a syndicated term loan and borrowings under its existing $700 million revolving credit facility. The company expects to close the deal in its fiscal third quarter of 2026, subject to customary conditions including regulatory approvals.
Following the acquisition, CSW anticipates its leverage will be approximately 2.0 times EBITDA. The company noted it recently paid down $35 million of debt in its second fiscal quarter of 2026, ending with $60 million outstanding on its revolving credit facility. CSWI’s strong liquidity position is evidenced by its current ratio of 2.86, and InvestingPro analysis reveals over 10 additional key insights about the company’s financial strength and growth potential, available in the comprehensive Pro Research Report.
This information is based on a press release statement from CSW Industrials.
In other recent news, Motors & Armatures (MARS) has entered into an agreement to sell its parts division to CSW Industrials for $650 million in cash, with an additional potential earn-out of up to $20 million based on post-closing revenue targets. This transaction is anticipated to close by the end of 2025, pending regulatory approval. CSW Industrials, on the other hand, has announced that this acquisition will be completed in its fiscal third quarter of 2026, valuing MARS Parts at approximately 12.5 times its trailing twelve-month adjusted EBITDA of $51.8 million, or 10.5 times with identified synergies. Additionally, CSW Industrials has promoted Fang Wang to vice president and chief accounting officer, while James Perry continues as the principal financial officer. Furthermore, CSW Industrials declared a regular quarterly cash dividend of $0.27 per share, payable on August 8, 2025, to shareholders of record as of July 25, 2025.
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