CSW Industrials to Acquire MARS Parts for $650 Million
Strategic acquisition significantly expands CSW's footprint in the high-margin HVAC/R components market.
CSW Industrials (CSW) has announced a definitive agreement to acquire the Motors & Armatures (MARS) parts division for $650 million in an all-cash transaction, a move that significantly bolsters its portfolio in the profitable heating, ventilation, air conditioning, and refrigeration (HVAC/R) market.
The deal, which includes a potential additional $20 million earn-out, is expected to be immediately accretive to CSW's earnings per share and EBITDA. , a figure that analysts have deemed reasonable for the industrial distribution sector.
CSW plans to finance the purchase through a syndicated term loan and borrowings from its existing credit facility. The company anticipates maintaining a leverage ratio of about 2.0 times EBITDA upon closing, which is expected in the third quarter of its fiscal year 2026, pending regulatory approvals. This strategic acquisition aligns with CSW's stated goal of expanding its presence in complementary end markets through disciplined capital allocation.
, providing CSW with an expanded product offering to distribute through its existing channels. Management expects to achieve significant cost synergies by optimizing facilities, scaling supply chains, and reducing redundant spending. , well above the company's current consolidated margin.
The move has been met with a positive reception from Wall Street, with analysts highlighting the strong strategic fit and the potential for substantial margin improvement. The acquisition is seen as a key step in leveraging CSW's distribution network and capitalizing on the stable, high-demand nature of the HVAC/R replacement parts market.