Xylem Inc. agreed to buy Evoqua Water Technologies Corp., bringing together the treatment companies in a $7.5 billion all-stock deal designed to address growing concerns around global water scarcity.
(Bloomberg) — Xylem Inc. agreed to buy Evoqua Water Technologies Corp., bringing together the treatment companies in a $7.5 billion all-stock deal designed to address growing concerns around global water scarcity.
Investors in the target company will receive 0.48 shares of Xylem for each Evoqua share, according to a statement Monday. That represents a value of $52.89 per share, or a 29% premium based on Jan. 20 closing prices.
Makers of pumps, filters and other treatment-system technology are gaining prominence in some corners of the investing world amid a heightened focus on access to clean water. Xylem is a key holding in a BlackRock Inc. exchange-traded fund focused on water.
Read more: BlackRock Fund Puts Rich-World Water Crisis on Investing Agenda
“Solving the world’s water challenges has never been more urgent,” Patrick Decker, Xylem’s chief executive officer, said in the statement. The Evoqua deal will help the companies more effectively address “water scarcity, affordability and resilience.”
The tie-up will create a water-technology company with more than $7 billion in revenue. Evoqua, based in Pittsburgh, has more than 38,000 customers and 200,000 installations worldwide. The combination is set to reach cost synergies of $140 million within three years, the companies said.
Xylem shareholders will own 75% of the company at closing, which is expected by midyear. Decker will continue to lead the combined operations.
Lazard and Guggenheim Securities advised Xylem, while Goldman Sachs and BofA Securities were financial advisers for Evoqua.
Xylem shares fell 9.3% at 9:35 a.m. in New York, while Evoqua gained 12%.
–With assistance from Thomas Black.
(Updates with share trading in final paragraph)
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