• Mizuho analyst Brett Linzey upgraded Pentair PLC (NYSE: PNR) to Neutral from Underperform and raised the price target to (an upside of 7%) from $60.

• The company's purchase of Manitowoc Ice business for a net price of $1.38 billion strengthens its commercial water franchise and should be meaningfully accretive to margins, states Linzey.

• Pentair recently agreed to acquire Manitowoc Ice, a provider of commercial ice makers from Welbilt, Inc (NYSE: WBT), for $1.6 billion or a net transaction value of ~$1.38 billion (adjusted for after-tax benefit).

• The company expects to fund the acquisition with new debt anticipated to be investment grade. The transaction is expected to close in 2Q22.

• Manitowoc Ice generated $308 million in revenue in 2021 with EBITDA margins of ~30%.

• Manitowoc Ice employs more than 800 team members and operates facilities in Manitowoc, Wisconsin, Monterrey, Mexico, and Hangzhou, China.

• Not including Manitowoc Ice, Pentair reiterated its FY22 and 1Q22 guidance. It expects the transaction to add ~$0.25 of Adjusted EPS accretion in 2023 and ~$0.40 in 2025.

• It also expects EBITDA margins of 30%+ for Manitowoc Ice, significant revenue synergies, and accelerated deleveraging based on strong free cash flow.

• Pentair plans to have Manitowoc Ice operate within its Water Solutions platform of the Consumer Solutions business segment.

• Pentair held cash and equivalents of .5 million as of December 31, 2021.

• Price Action: PNR shares traded lower by 1.70% at $57.79, and WBT lower by 0.23% at $23.75 on the last check Friday.

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