Reliance Worldwide Corporation (ASX:RWC) has entered into a binding scheme implementation deed under which Brookfield proposes to acquire all of the company’s ordinary shares for US$3.38 cash per share. The transaction shifts attention from the normal Earnings cycle toward Shareholder approval, regulatory clearances and possible alternative proposals. The scheme follows a FY26 result marked by lower adjusted earnings, restructuring charges and continued efforts to reduce costs and reshape Manufacturing operations.

Brookfield Offer Becomes Binding Scheme

RWC signed the scheme implementation deed on 16 September 2026.

Brookfield proposes to pay US$3.38 in cash for each RWC share. Based on the prevailing Exchange Rate on 15 September, this represented approximately A$4.75 per share.

The cash consideration represented premiums of approximately 31.5% to the undisturbed closing price, 32.7% to the three-month volume-weighted average price and 43.0% to the six-month equivalent.

The transaction implied an Enterprise value of approximately US$2.9 billion on a post-AASB 16 basis.

Earlier Approaches Led to Higher Proposal

The binding scheme followed several earlier approaches from Brookfield.

RWC received unsolicited indicative offers of A$4.15, A$4.25 and A$4.50 per share during April and May 2026.

After due diligence, Brookfield increased its proposal to A$4.75 per share in early August.

The parties subsequently entered into a process deed on 18 August before progressing to the binding scheme announced in September.

Go-Shop Period Allows Alternative Proposals

The scheme includes a go-shop arrangement that allows RWC to actively solicit alternative proposals until 15 October 2026.

During this period, the company and its advisers may approach other parties, provide Due Diligence information and negotiate competing proposals.

An alternative proposal received during the go-shop period may continue to be progressed afterward in certain circumstances.

Brookfield retains a matching right, including a five-business-day period to provide an equivalent or superior counterproposal before RWC can enter into a competing transaction.

Board Supports the Scheme Subject to Conditions

RWC’s directors unanimously recommend that shareholders vote in favour of the scheme in the absence of a superior proposal.

The recommendation is also conditional on the independent expert concluding, and continuing to conclude, that the transaction is in shareholders’ best interests.

The scheme remains subject to shareholder approval, court approval and a range of regulatory conditions.

These include approvals or clearances associated with Australia, the United States, Germany and Ukraine.

FY26 Earnings Decline

RWC reported FY26 net sales of US$1,305.6 million, down 0.7% from US$1,314.7 million in FY25.

Adjusted EBITDA declined 12.8% to US$242.1 million from US$277.7 million, with the adjusted EBITDA Margin falling to 18.5%.

Adjusted NPAT decreased 15.3% to US$125.1 million.

Reported NPAT was US$6.3 million compared with US$125.0 million in FY25.

The earnings result was affected by US tariffs, higher copper costs, softer Americas and EMEA volumes and broader cost inflation.

Restructuring Weighs on Reported Profit

Reported earnings included US$103.3 million of post-tax one-off charges.

These were principally associated with restructuring RWC’s Asia-Pacific metals manufacturing operations and a resulting US$73.8 million Goodwill impairment.

The restructuring included the closure of metals manufacturing operations in Melbourne as well as other Facility rationalisation measures.

The company is reshaping its operating footprint as it responds to changing demand, tariffs and manufacturing economics.

Cash Generation Reduces Debt

Despite weaker earnings, RWC generated US$263.4 million of Operating Cash Flow during FY26.

Net Debt declined by US$88.2 million, while the net debt-to-adjusted EBITDA ratio improved to 1.11 times from 1.30 times.

This reduction provided greater balance-sheet flexibility entering the proposed transaction process.

Dividend and Buyback Put on Hold

RWC paid an interim FY26 Dividend of US2.0 cents per share.

No final FY26 dividend or distribution was declared after receipt of Brookfield’s proposal.

The company also suspended further share buybacks.

If the Brookfield transaction does not proceed, RWC has indicated that it intends to consider paying a dividend and/or recommencing its share buyback during calendar 2027 from FY26 earnings.

Transaction Conditions Remain

The scheme still depends on several conditions before implementation.

RWC shareholders must approve the transaction by the required majorities, while the court must also approve the scheme.

Regulatory approvals include FIRB, ACCC, US Hart-Scott-Rodino requirements and competition approvals in Germany and Ukraine.

A break fee of US$25.3 million is payable by RWC to Brookfield in specified circumstances, while Brookfield faces an equivalent reverse break fee under specified conditions.

Implementation is currently expected during Q1 2027, although timing may change.

Key Areas to Watch

The end of the go-shop period on 15 October 2026 is the next significant transaction milestone.

Attention will then turn to the scheme booklet, independent expert’s report and shareholder meeting.

Regulatory approvals and court proceedings will determine whether the transaction progresses according to the current timetable.

Because the consideration is denominated in US dollars, shareholders electing Australian-dollar payment will also be exposed to the exchange rate prevailing immediately before implementation.