Pentair has entered into a definitive agreement to acquire Taco Group Holdings for approximately $1.4 billion, subject to customary adjustments. The purchase price represents approximately 10.5 times Taco’s estimated 2026 earnings before interest, taxes, depreciation and amortization. That calculation includes approximately $165 million in expected tax benefits and $30 million in anticipated annual cost savings.
Taco develops hydronic and water-based systems used in heating, ventilation, air conditioning, plumbing, data centers and other commercial, industrial and residential applications.
Hydronic systems use water or another liquid to transfer heat through buildings and industrial facilities. Taco’s portfolio includes pumps, valves, tanks, heat exchangers and advanced control systems.
The Cranston, Rhode Island-based company has operated for more than 100 years and serves customers across North America, Europe and Asia.
Taco is expected to generate approximately $540 million in fiscal 2026 revenue. Pentair expects the acquired business to produce adjusted EBITDA margins above 20% after including projected cost synergies.
Pentair believes the acquisition will expand its exposure to high-growth commercial and mission-critical markets, including data centers, hospitals, schools, universities and multifamily residential properties.
Data centers require extensive cooling and water-management infrastructure to control the heat generated by servers and other computing equipment. Growth in cloud computing and artificial intelligence is increasing demand for efficient cooling systems, pumps and related controls.
Taco’s products will complement Pentair’s existing water-management portfolio and give the combined company a broader range of systems for commercial, infrastructure, industrial and residential customers.
Pentair also expects the transaction to create product development opportunities by combining its innovation resources with Taco’s expertise in hydronic systems and controls.
The companies use complementary sales channels. Pentair has an established distribution network, while Taco works extensively through manufacturer representatives who maintain relationships with equipment manufacturers, distributors, contractors, engineers and end users.
Combining those channels is expected to create cross-selling opportunities and give both companies access to a broader customer base.
Taco also has a large installed base of pumps, valves and related systems. Installed equipment can generate recurring aftermarket revenue through replacement components, maintenance services and system upgrades.
Pentair expects these recurring needs to support more durable revenue and deepen its relationships with commercial and industrial customers.
The company anticipates approximately $30 million in annual cost savings from supply-chain improvements and operational efficiencies.
Pentair also plans to implement its Pentair Business System, an operating framework used to improve productivity, pricing, product development and commercial execution.
Beyond cost reductions, Pentair expects revenue synergies from expanded distribution, cross-selling and increased scale.
The acquisition is expected to add approximately $0.10 to $0.15 to Pentair’s adjusted earnings per share during fiscal 2027. An acquisition is considered accretive when it is expected to increase the acquiring company’s earnings per share.
Pentair expects its net leverage ratio to reach approximately 2.4 times following the closing. The company plans to reduce that ratio to less than 1.5 times within two years.
A net leverage ratio compares a company’s net debt with its earnings before interest, taxes, depreciation and amortization. Lowering the ratio would indicate that Pentair is reducing debt relative to its operating earnings.
Pentair said its cash generation and balance sheet should provide enough flexibility to continue investing in growth initiatives while maintaining its capital return strategy. The company has increased its dividend for more than 50 consecutive years.
The acquisition is expected to close during the fourth quarter of 2026, subject to regulatory approvals and customary closing requirements.
Pentair plans to fund the transaction through a combination of cash on hand and committed bridge financing. It expects to refinance the temporary bridge facility through a permanent debt issuance.
Following completion, Taco will become part of Pentair’s Water Solutions reporting segment. The company will continue operating under the Taco brand and maintain a significant presence in Cranston.
The decision to preserve the brand reflects Taco’s established reputation and longstanding relationships with contractors, engineers, equipment manufacturers and distributors.
Pentair generated approximately $4.2 billion in revenue during 2025 and employs about 9,000 people serving customers in more than 150 countries.
Jefferies is serving as Pentair’s financial advisor, while Faegre Drinker Biddle & Reath is providing legal counsel. U.S. Bank is the lead financing provider.
Goldman Sachs and Doeren Mayhew Advisors are advising Taco, and Loeb & Loeb is serving as its legal counsel.
KEY QUOTES:
“This highly strategic and value creating acquisition enhances the scale and reach of Pentair’s innovative water solutions serving high-growth commercial and industrial end-markets, including HVAC and data centers.”
“The addition of Taco will provide Pentair with a more comprehensive suite of solutions and enhanced development capabilities to benefit our customers across commercial, industrial and residential applications.”
“We are confident in our ability to unlock significant profitability as we scale Taco, accelerate its growth across commercial markets and implement the Pentair Business System.”
John L. Stauch, President and CEO of Pentair
“This partnership with Pentair allows us to accelerate our growth, expand our capabilities and further invest in our innovation and technology.”
“It will also allow us to preserve our values, expertise and customer relationships, which have made Taco successful.”
John Hazen White Jr., Owner and Chairman of Taco, and Benjamin White, President of Taco
