Global water technology leader Xylem purchased Evoqua Water Technologies Corp in a USD $7.5 billion all-stock deal this Monday, noting that the combined company will be uniquely positioned to address water scarcity and affordability with a shared focus on solving the world’s water challenges.
Evoqua, a North American leader in water treatment solutions and services, will complement Washington, D.C.-based Xylem’s distinctive portfolio of solutions with advanced water and wastewater treatment capabilities, company leaders said.
“Solving the world’s water challenges has never been more urgent. Our acquisition of Evoqua creates a transformative global platform to address water scarcity, affordability and resilience at even greater scale,” announced Patrick Decker, president and CEO of Xylem. “The combined company delivers an unparalleled portfolio of advanced technologies, integrated services and application expertise across the water cycle.”
Headquartered in Pittsburgh, Pennsylvania, Evoqua’s solutions include digitally-enabled offerings and the ability to optimize and outsource water treatment systems for customers in high-growth sectors such as life sciences, microelectronics, power, and food and beverage. It operates in more than 160 locations across nine countries and is also considered a leader in the remediation of emerging contaminants such as PFAS.
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Evoqua changed its name from Siemens Water Technologies LLC after being acquired by AEA Investors LP for USD $872 million in 2014.
“This combination provides a platform to leverage our combined strengths and increase our impact to better address the most pressing and increasingly complex global water challenges,” announced Ron Keating, Evoqua’s president and CEO. “I am incredibly proud of what our team at Evoqua has achieved to date, providing mission-critical water treatment solutions to the market and for our customers.”
Xylem and Evoqua generated more than $7 billion in combined revenue in the 12-month period ending September 30, 2022, with $1.2 billion in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization). Some of the well-known water technology brands now owned by the combined company include: Vortisand, Wallace & Tiernan, Neptune Benson, Flygt, YSI, Sensus, Leopold and many more.
“We are excited about building the world’s most powerful platform for solving water alongside our Evoqua colleagues,” said Decker.
The companies estimate that they can save upwards of $140 million in cost synergies within three years due to scale efficiencies in procurement, network optimization, and corporate costs.
Some investors, however, appeared to balk at the transaction’s hefty price tag, as shares in Xylem dropped nearly 11% following the merger. Under the transaction, Evoqua shareholders will receive 0.480 shares of Xylem per share — a value of $52.89 per share, or a 29% premium based on the companies’ closing prices on January 20. Shares in Evoqua, climbed as much as 13% following the announcement.
