Zurn Elkay Water Solutions Announces Launch of Public Offering of Common Stock by Selling Stockholder

Rhea-AI Summary

Zurn Elkay Water Solutions (NYSE:ZWS) announced a public offering where Ice Mountain , a former Elkay stockholder, will sell 7,750,000 shares of common stock. The underwriters have a 30-day option to purchase an additional 1,162,500 shares. Zurn Elkay plans to repurchase approximately $50,000,000 worth of shares from the underwriters.

The company will not sell any common stock or receive proceeds from this offering. Evercore ISI is leading the offering as the joint book-running manager, with Baird as an additional book-running manager. BNP Paribas, Deutsche Bank Securities, Mizuho, Oppenheimer & Co., and Stifel are acting as co-managers.

Positive

• Company plans to repurchase $50M worth of shares, potentially supporting stock price
• Multiple prestigious financial institutions involved as underwriters indicating strong market support

Negative

• Large secondary offering of 7.75M shares could create selling pressure
• Significant shareholder (Ice Mountain ) reducing stake could signal lack of confidence

Insights

Financial Analyst

The announced secondary offering of 7.75 million shares represents approximately 4.5% of Zurn Elkay's outstanding shares, a substantial block that could impact trading dynamics. The company's strategic decision to repurchase $50 million worth of shares demonstrates confidence in its valuation and helps absorb some of the selling pressure.

The offering's structure reveals several key insights: First, the selling stockholder (Ice Mountain ) is likely seeking liquidity for their Elkay-derived position, which is common post-merger. Second, the strong underwriting syndicate, led by Evercore ISI and including major banks, suggests institutional appetite for the placement. Third, the 30-day overallotment option of 1.16 million additional shares provides flexibility to meet excess demand while potentially stabilizing post-offering trading.

The company's share repurchase component is particularly noteworthy. At current market prices, this represents approximately 1.4 million shares, or roughly 18% of the offering. This action effectively reduces the net new supply hitting the market while representing an efficient use of capital given recent market conditions. The timing and structure of this offering, combined with the company's participation, suggests a well-coordinated approach to managing the stock's trading dynamics during this transition of ownership.

MILWAUKEE--(BUSINESS WIRE)-- Zurn Elkay Water Solutions Corporation (NYSE:ZWS) (“Zurn Elkay”) announced today the launch of an underwritten public offering by a certain former Elkay stockholder, Ice Mountain LLC (the “selling stockholder”), of 7,750,000 shares of Zurn Elkay’s common stock, par value $0.01 per share (“common stock”), of which Zurn Elkay intends to repurchase from the underwriters approximately $50,000,000 of such shares of common stock. The underwriters will have a 30-day option to purchase up to an additional 1,162,500 shares of common stock from the selling stockholder. Zurn Elkay will not sell any common stock in the offering and will not receive any proceeds from the sale of the shares of common stock by the selling stockholder in this offering.

Evercore ISI is acting as the lead joint book-running manager. Baird is acting as an additional book-running manager. BNP Paribas, Deutsche Bank Securities, Mizuho, Oppenheimer & Co., and Stifel are acting as co-managers for the offering.

Zurn Elkay has filed a registration statement (including a base prospectus) on Form S-3 and a preliminary prospectus supplement with the Securities and Exchange Commission (the “SEC”) for the offering to which this communication relates. The registration statement became effective upon filing on February 11, 2025. Before you invest, you should read the prospectus in that registration statement, the prospectus supplement, and other documents Zurn Elkay has filed with the SEC for more complete information about Zurn Elkay and the offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, copies of the preliminary prospectus supplement and the accompanying prospectus relating to the offering may be obtained by contacting: Evercore Group L.L.C., Attention: Equity Capital Markets, 55 East 52nd Street, 35th Floor, New York, New York 10055, by telephone at 888-474-0200, or by email at ecm.prospectus@evercore.com; or Baird, 777 East Wisconsin Avenue, Milwaukee, WI 53202, Attention: Syndicate Department, Telephone: 800-792-2473, Email: syndicate@rwbaird.com.

This press release does not constitute an offer to sell or a solicitation of an offer to buy these securities, nor does it constitute an offer, solicitation or sale of these securities in any jurisdiction in which such offer, solicitation or sale is unlawful.

About Zurn Elkay Water Solutions

Named one of America’s Most Responsible Companies and one of America’s Greenest Companies by Newsweek and one of the World’s Best Companies for Sustainable Growth by TIME , Zurn Elkay Water Solutions is headquartered in Milwaukee, WI, and is a growth-oriented, pure-play water management business that designs, procures, manufactures and markets what we believe to be the broadest sustainable product portfolio of specification-driven water management solutions to improve health, hydration, human safety and the environment. The Zurn Elkay product portfolio includes professional grade water safety and control products, flow systems products, hygienic and environmental products and filtered drinking water products for public and private spaces. Learn more at www.zurnelkay.com.

Cautionary Statement on Forward-Looking Statements

Information in this release may involve outlook, expectations, beliefs, plans, intentions, strategies or other statements regarding the future, which are forward-looking statements. These forward-looking statements involve risks and uncertainties. All forward-looking statements included in this release are based on information available to Zurn Elkay Water Solutions as of the date of this release, and Zurn Elkay Water Solutions assumes no obligation to update any such forward-looking statements. The statements in this release are not guarantees of future performance, and actual results could differ materially from current expectations. Numerous factors could cause or contribute to such differences. Please refer to “Risk Factors” and “Cautionary Notice Regarding Forward-Looking Statements” in Zurn Elkay’s annual report on Form 10-K for the period ended December 31, 2024, as well as Zurn Elkay’s subsequent annual, quarterly and current reports filed on Forms 10-K, 10-Q and 8-K from time to time with the Securities and Exchange Commission for a further discussion of the factors and risks associated with the business.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250211849620/en/

Dave Pauli

Chief Financial Officer

414.223.7770

Source: Zurn Elkay Water Solutions Corporation

FAQ

How many shares is Ice Mountain selling in the ZWS public offering?

Ice Mountain is selling 7,750,000 shares of Zurn Elkay common stock, with underwriters having a 30-day option to purchase an additional 1,162,500 shares.

How much stock is Zurn Elkay (ZWS) planning to repurchase from the offering?

Zurn Elkay plans to repurchase approximately $50,000,000 worth of shares from the underwriters.

Who are the lead underwriters for the ZWS secondary offering?

Evercore ISI is acting as the lead joint book-running manager, with Baird as an additional book-running manager.

Will Zurn Elkay (ZWS) receive any proceeds from this stock offering?

No, Zurn Elkay will not sell any common stock in the offering and will not receive any proceeds from the sale of shares by Ice Mountain