Zurn Water Solutions Corporation (NYSE:ZWS) entered into a definitive agreement to acquire Elkay Manufacturing Company, Inc. from Elkay family for $1.6 billion on February 12, 2022. As per the terms of the transaction, Zurn Water Solutions shall issue 52.5 million common stocks to Elkay. Upon completion of the deal, the former Elkay shareholders are expected to own approximately 29% of Zurn common stock on a fully diluted basis. The name of the combined company will be Zurn Elkay Water Solutions Corporation post deal completion and will continue to trade under the ticker NYSE: ZWS. Zurn may be required to pay Elkay a termination fee of $50 million. Zurn will appoint two Elkay representatives to the Board of Directors of Zurn. Todd Adams will continue to be Chair of the Board and Chief Executive Officer of Zurn, Craig Wehr will continue to lead the Zurn business and Ted Hamilton will continue to lead the Elkay business. The stockholders of Elkay agreed, for a period of 18 months from the closing of the agreement, not to sell or transfer the shares of Zurn common stock, subject to certain exceptions.

The transaction is subject to customary conditions, including, among others, the absence of Laws or Orders by a Governmental Authority of competent jurisdiction enjoining or prohibiting the consummation of the transactions; the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976; the required approvals by the respective shareholders of Zurn and Elkay; the Registration Statement having become effective; the shares of Zurn common stock to be issued in the deal being approved for listing on the New York Stock Exchange as of the closing; the accuracy of Zurn and Elkay's representations and warranties; Zurn and Elkay's compliance with the covenants and agreements in the agreement in all material respects; and the absence of any material adverse effect on Zurn or Elkay. As of April 5, 2022, the Elkay Board has unanimously approved the merger agreement and recommended that Elkay stockholders adopt the merger agreement. As of May 26, 2022, Zurn Water's stockholder voted to approve the issuance of shares of Zurn common stock necessary to complete the previously announced combination with Elkay Manufacturing Company. The transaction is expected to close in the third quarter of 2022. As of June 22, 2022, the transaction is expected to close very early in the third quarter of 2022. The deal reduces net debt leverage to 1.0x by end of 2022.

J.P. Morgan Securities LLC and Citigroup Inc. acted as financial advisors while Paul Theiss and Jason Wagenmaker of Mayer Brown LLP acted as legal advisor to Elkay. Evercore Group L.L.C. acted as financial advisor and fairness opinion provider and Alec Dawson, Andrew L. Milano and Allison D. Gargano of Morgan, Lewis & Bockius LLP acted as legal advisor to Zurn. Clint Rancher, Josh Davidson and Samantha Crispin of Baker Botts advised Evercore on the deal. Cleary Gottlieb Steen & Hamilton LLP acted as legal advisor to Elkay. American Stock Transfer & Trust Company, LLC acted as transfer agent to Zurn. Morrow Sodali LLC acted as proxy solicitor to Zurn and Zurn will pay a fee of approximately $15,000, plus reimbursement of expenses. Zurn agreed to pay Evercore a fee of $4 million upon the delivery of Evercore's opinion to the Zurn Board and also agreed to pay Evercore a transaction fee of $20 million. J.P. Morgan Securities LLC and Citigroup Inc. acted as fairness opinion provider to Elkay. Elkay has agreed to pay Citi for its services in connection with the proposed transaction (i) a fee of?$3,500,000, of which $1,500,000 became payable to Citi upon delivery of its opinion. Clint Rancher, Lakshmi Ramanathan, Joshua Davidson of Baker Botts L.L.P represented Evercore.