Water technology company Xylem Inc. announced that it is acquiring Evoqua Water Technologies, a provider of water and wastewater treatment solutions, in an all-stock transaction.
The transaction reflects an implied enterprise value of approximately $7.5 billion.
Evoqua complements Xylem’s distinctive portfolio of solutions with advanced water and wastewater treatment capabilities. Xylem expects the combination to unlock new growth opportunities and to deliver run-rate cost synergies of $140 million within three years, driven by scale efficiencies in procurement, network optimization and corporate costs.
"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,” says 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.”
Building on Xylem’s global position in water solutions and Evoqua’s position in advanced treatment solutions and services, Xylem says that the combined company will be uniquely positioned to develop and deliver an even more comprehensive offering of innovative solutions.
“Together, our complementary businesses will be even more strongly positioned to help our customers and communities tackle their most challenging water needs,” says Decker. “We are excited about building the world’s most powerful platform for solving water alongside our Evoqua colleagues.”
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 per- and polyfluoroalkyl substances (PFAS).
“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,” says 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 over $7 billion in combined revenue in the 12-month period ending September 30, 2022.
Transaction Details
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.
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.
Upon closing, Xylem shareholders will own approximately 75 percent and Evoqua shareholders will own approximately 25 percent of the combined company on a fully diluted basis.
Following the closing, the combined company will continue to be led by Patrick Decker. Two current members of the board of directors of Evoqua are expected to join Xylem’s board of directors.