nVent Electric has finalized an agreement to acquire the electrical products business of a company partially owned by AZZ for $975 million, anticipating a surge in demand for its electrical operations. This acquisition emphasizes nVent's commitment to enhancing its position in the electrical solutions market. The London-based provider is set to purchase the enclosures, switchgear, and bus systems businesses of Avail Infrastructure Solutions, a move confirmed by both companies in their respective statements on Monday.
In a joint venture, AZZ holds a 40% stake in Avail Infrastructure Solutions, with the remaining 60% owned by Fernweh Group. According to nVent, the electrical products group encompasses approximately 1,100 employees and operates across nine manufacturing sites in the United States. nVent's Chief Executive, Beth Wozniak, highlighted that the demand for control buildings, switchgear, and bus systems is projected to grow as the need for modernizing aging electrical infrastructure increases.
With the ongoing expansion of electrical capacity to meet escalating power demand and the burgeoning growth of data centers, this acquisition hints at a lucrative future for nVent. The transaction is expected to be finalized within the first half of the year. Valuing the segment at around 12.5 times its anticipated trailing 12-month earnings before interest, taxes, depreciation, and amortization indicates a strong business outlook.
In the year leading up to February 28, Avail's electrical products group generated approximately $375 million in revenue, showcasing its potential for significant contribution. The acquisition is anticipated to positively impact nVent's adjusted earnings per share within the first year following completion.
Additionally, this divestment aligns with AZZ's strategic goal of transforming itself into a preeminent provider of metal coating solutions. CEO Tom Ferguson noted that the company plans to utilize the cash generated from this transaction to either reduce debt or facilitate potential M&A activity. Moreover, Fernweh Group CEO Nick Santhanam expressed optimism regarding the acquisition, stating that it is expected to unveil new opportunities for Avail's business, its workforce, and its clientele.
This multi-faceted approach not only positions nVent favorably in the electrical market but also reflects a broader commitment to innovation and efficiency in an industry poised for growth..