Franklin Electric to acquire Challenge Pumps for $181 million

Fort Wayne, Indiana - Franklin Electric Co. (NASDAQ:FELE) announced a definitive agreement to acquire Challenge Pumps Holdings Pty Ltd for roughly $181 million in cash, along with a potential additional $14 million contingent upon future revenue performance. Based in Perth, Western Australia, Challenge Pumps specializes in high-head dewatering pumps and engineered pumping systems tailored for underground mining operations.

The company reported revenue of around $52 million and EBITDA of $18 million for the fiscal year concluding June 2026. The transaction is projected to conclude in 2026 after the completion of the target's audit process and the fulfillment of all closing conditions. Franklin Electric intends to finance the acquisition using cash reserves and loans under its current credit lines.

A significant portion of Challenge Pumps' revenue, over 55% in the past three years, has been generated through aftermarket sales, such as replacement parts and services. The company caters to mining companies and contractors in Australia and other international mining regions. Joe Ruzynski, Franklin Electric's Chief Executive Officer, stated that the company expects the acquisition to boost adjusted earnings per share in 2027.

Post-acquisition, Franklin Electric anticipates maintaining a net leverage ratio of approximately 1.8 times. The newly acquired Challenge Pumps will be incorporated into Franklin Electric's Water Systems segment and will maintain its Challenge Pumps brand. The purchase price may undergo adjustments as per standard practices. Notably, Challenge Pumps had recently completed an expansion of its facility to facilitate ongoing growth objectives.