CSW Industrials has announced the acquisition of Motors & Armatures Parts (MARS Parts) for $650 million in cash. This deal is subject to standard closing adjustments, which are customary in such deals.
In addition to the base purchase price, there is an earn-out provision that could add up to $20 million, contingent upon achieving specific revenue targets in the year following the acquisition.
The financial details reveal that the cash purchase price, excluding the earn-out, reflects a multiple of 10.5 times the pro forma trailing twelve months (TTM) EBITDA, adjusted for known synergies. This is approximately 12.5 times MARS Parts’ estimated adjusted TTM EBITDA of $51.8 million, indicating a strong valuation for the business being acquired.
To finance this acquisition, CSW plans to rely on a combination of a Syndicated Term Loan A and existing borrowings from its $700 million revolving credit facility. The company expects to finalize the transaction in the third quarter of its 2026 fiscal year, contingent upon meeting various customary closing conditions that are standard in mergers and acquisitions.
MARS Parts stands out as one of North America’s largest distributors of HVAC/R (heating, ventilation, air conditioning, and refrigeration) parts and supplies, as well as a leading provider of motors and capacitors. The company benefits from both U.S.-based manufacturing capabilities and partnerships with strong contract manufacturers.
This enables MARS Parts to offer a diverse range of HVAC/R electrical products to its customers. Notably, the product mix leans more towards repair needs than replacements, strategically complementing CSW’s existing Contractor Solutions business, which has typically focused more on new installations and replacements.
The leadership at CSW believes that this acquisition will significantly enhance their competitive edge by adding new complementary products to their already diverse portfolio. Importantly, the acquisition will exclude the equipment segment of the existing Motors & Armatures business, allowing for a more focused integration.
CSW anticipates that the combined organization will enhance the customer experience in the industry, aiming to achieve a leadership position in critical product categories related to residential HVAC/R. Additionally, the acquisition is expected to yield substantial cost synergies. CSW plans to capitalize on its existing leadership team, manufacturing capabilities, and distribution network to streamline operations.
This includes optimizing facilities, scaling supply chains, and reducing redundancies in spending. The company predicts that, through these identified cost synergies, MARS Parts will achieve an adjusted EBITDA margin exceeding 30% within just twelve months after the acquisition closes.
In terms of financial performance, during the second fiscal quarter of 2026, CSW successfully paid down $35 million of debt, leaving $60 million remaining on its revolving credit facility. Furthermore, the company actively managed its capital by repurchasing approximately $18.3 million in stock as part of its ongoing share repurchase program.
KEY QUOTES:
“I am pleased to announce that we have entered into a definitive agreement to acquire MARS Parts, a leading provider of motors, capacitors, and other HVAC/R solutions. This acquisition will expand our existing HVAC/R product portfolio with highly complementary offerings and enhance our value proposition in the HVAC/R end market. CSW is uniquely positioned to accelerate the growth of these products through our market knowledge, customer focus, and investment in people, systems, and processes. We believe that this highly strategic acquisition will enable us to drive above-market profitable growth, enhance long-term shareholder value, and stay well within our stated leverage target, at approximately 2.0x EBITDA per the estimated credit agreement calculation, upon closing. MARS Parts is expected to meaningfully grow CSW’s already strong cash flow, which will allow us to continue to pursue growth opportunities and pay down debt.”
Joseph B. Armes, Chairman, President, and Chief Executive Officer of CSW Industrials
“I am thrilled that the MARS Parts business will be joining the RectorSeal family and enhancing our offering of premium, high-quality HVAC/R products. They have commercial strength in product categories where we currently do not participate, with a mix that skews heavily toward repair to complement our existing portfolio. The combined organization will provide a more robust and fulsome product portfolio that will allow us to better serve distributors and contractors with additional high value products. This investment will allow us to better serve HVAC/R distributors.”
Jeff Underwood, Senior Vice President of CSW Industrials and General Manager, Contractor Solutions
