Dallas-based CSW Industrials (NYSE: CSW) has announced that it’s acquiring Motors & Armatures Parts—also known as MARS Parts—for $650 million in cash.

Headquartered in Hauppauge, New York, MARS Parts is one of the largest distributors of HVAC/R parts and supplies in North America, and a leading provider of motors and capacitors. With a product mix more heavily focused on repair versus replacement, MARS Parts will strategically complement CSW’s current contractor solutions business, which traditionally has been more focused on new unit installations and replacements, CSW said.

The acquisition excludes the equipment segment of the existing Motors & Armatures business, CSW noted.

CSW Industrials is a diversified industrial growth company headquartered in Lincoln Centre in North Dallas. Its strategic focus is based on providing niche, value-added products in the end markets it serves.

Seeking a leadership position in residential HVAC/R

CSW said the newly combined organization will have the ability to provide “the best customer experience in the industry with a leadership position in the prevailing product categories for residential HVAC/R.” CSW also aims to realize “significant cost synergies” via the acquisition, by leveraging its existing CSW and contractor solutions leadership team and manufacturing and distribution footprint, optimizing facilities, scaling supply chains, and reducing duplicative spending.

“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,”Joseph B. Armes, chairman, president, and CEO of CSW Industrials, said in a statement.  “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,” Armes added. “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.”

CSW said it expects the MARS Parts business to achieve a 30+% adjusted EBITDA margin run rate within 12 months after the deal closes.

Jeff Underwood, SVP of CSW Industrials and GM of the company’s contractor solutions team, said the MARS Parts business offers “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,” he added in a statement. “This investment will allow us to better serve HVAC/R distributors.”

Follows two key acquisitions in 2024

The MARS Parts deal follows two other eight-figure acquisitions CSW made in 2024. In August 2024, CSW acquired Manassas, Virginia-based PSP Products and its family of surge protection and load management products in a $40 million deal. Three months later, CSW ponied up another $40 million to acquire Houston-based PF Waterworks, which develops and manufactures plumbing products targeting “Clean and Green” for both residential and commercial applications. 

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