Xylem Inc to buy Evoqua Water Tech in $7.5 billion all-stock deal
Global water technology behemoth Xylem Inc has said it has entered into an agreement to acquire Evoqua Water Technologies (Evoqua), a water treatment solutions and services company in an all-stock transaction.
The acquisition, one of the largest in recent months, reflects an implied enterprise value of approximately $7.5 billion. Evoqua shareholders will receive 0.480 shares of Xylem for each Evoqua share, representing a value of $52.89 per share or a 29 percent premium based on Xylem and Evoqua closing prices as of January 20, 2023.
US-based Evoqua is a leader in North America water treatment and complements Xylem’s distinctive portfolio of solutions with advanced water and wastewater treatment capabilities, a powerful and extensive network of service professionals and access to a number of attractive industrial markets with resilient, recurring revenue streams, according to an official statement
Evoqua’s solutions, including digitally enabled offerings, optimize and outsource mission-critical water treatment systems for customers in high-growth sectors such as life sciences, microelectronics, power and food and beverage. In addition, Evoqua is a leader in the remediation of emerging contaminants, including PFAS.
Xylem and Evoqua generated over $7 billion in combined revenue in the 12-month period ended September 30, 2022, with $1.2 billion in adjusted EBITDA. The combination unlocks compelling new growth opportunities and is expected to deliver run-rate cost synergies of $140 million within three years, driven by scale efficiencies in procurement, network optimization and corporate costs. In addition, the transaction allows Xylem to maintain its strong balance sheet, which provides the combined company with significant strategic flexibility and optionality.
“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,” said Xylem President and CEO Patrick Decker.
“The combined company delivers an unparalleled portfolio of advanced technologies, integrated services and application expertise across the water cycle”.
“Together, our complementary businesses will be even more strongly positioned to help our customers and communities tackle their most challenging water needs,” said Decker. “We are excited about building the world’s most powerful platform for solving water alongside our Evoqua colleagues.”
As water risks rise in global importance, this transaction unites two companies with a shared focus on solving the world’s water challenges by addressing customers’ and communities’ most critical needs. Building on Xylem’s global leadership in water solutions and Evoqua’s leadership in advanced treatment solutions and services, the combined company will be uniquely positioned to develop and deliver an even more comprehensive offering of innovative solutions, said the statement.
As water risks rise in global importance, this transaction unites two companies with a shared focus on solving the world’s water challenges by addressing customers’ and communities’ most critical needs. Building on Xylem’s global leadership in water solutions and Evoqua’s leadership in advanced treatment solutions and services, the combined company will be uniquely positioned to develop and deliver an even more comprehensive offering of innovative solutions
“Joining forces with Xylem is an exciting opportunity for Evoqua and for our team members. 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,” said Evoqua President & CEO Ron Keating.
“…….Together with Xylem, we will drive innovation on a larger scale for our customers, positioning us to create even more value for our stakeholders”, said Keating.
According to the statement, the transaction, which is anticipated to close in mid-2023, is subject to approval by shareholders of Xylem and Evoqua, the receipt of required regulatory approvals and other customary closing conditions.
Upon closing, Xylem shareholders will own approximately 75 per cent and Evoqua shareholders will own approximately 25 per cent of the combined company on a fully diluted basis.
Following the closing, the combined company will continue to be led by Patrick Decker, Xylem’s President and CEO. Two current members of the board of directors of Evoqua are expected to join Xylem’s board of directors.
