The first few months of 2023 have already brought several major acquisitions to the water industry.
Xylem had acquired Evoqua for $7.5 billion, Solenis acquired Diversey Holdings for $4.6 billion, Badger Meter acquired Syrinix for £15 million, H2M architects + engineers acquired Crew Engineers Inc., and much more.
Xylem acquires Evoqua
On Jan. 23, 2023, water technology company Xylem announced that it would be acquiring Evoqua Water Technologies, a provider of water and wastewater treatment solutions, in an all-stock transaction valued at approximately $7.5 billion.
Xylem says that the combined company will be uniquely positioned to develop and deliver an even more comprehensive offering of solutions.
“Our acquisition of Evoqua creates a transformative global platform to address water scarcity, affordability, and resilience at even greater scale,” said Patrick Decker, president and CEO of Xylem, in the announcement. “The combined company delivers an unparalleled portfolio of advanced technologies, integrated services and application expertise across the water cycle.”
In Fiscal Year 2022, the two companies generated over $7 billion in combined revenue.
“I think that Xylem/Evoqua deal is telling in some respect,” said Tisdale. “Xylem quite honestly, had its eyes on Evoqua for quite a long time — for the better part of four or five years. But what I do think it does tell us is that the industrial or corporate sustainability markets are strong, and Xylem sees that as an opportunity. Evoqua is strong in that area in industrials, especially in the U.S. but it also has a strong presence in the industrials in the Asia and Pacific region, where Xylem is a little bit weaker. So they do complement each other in some respects.”
The transaction is still subject to approval by shareholders and regulators. Xylem has estimated the acquisition to close by mid-2023.
Solenis acquires Diviersey
Solenis, a provider of treatment solutions for both municipal and industrial water, announced on March 8, 2023 that it entered into an agreement to acquire Diversey, a provider of cleaning and disinfection solutions, in an all-cash transaction valued at about $4.6 billion.
Diversey provides hygiene, infection prevention and cleaning solutions, providing water treatment solutions primarily to industrial water users.
The acquisition marks an important shift for the markets that Solenis serves.
“The merger presents a unique opportunity to enhance value and create a more diversified business with increased scale, broader global reach, and superior customer service capabilities,” said Phil Wieland, CEO of Diversey, in the announcement. “It will enable the combined company to grow and provide a number of attractive cross-selling opportunities, including meeting increasing customer demand for water management, cleaning and hygiene solutions.”
“Solenis is private equity-backed,” said Tisdale. “It’s gone through its own arc of a story, from where it came from. More recently, it was acquired by Platinum Equity in 2021. It’s been making about five or so deals since then. But what’s interesting is, in the back of my mind, I look at Solenis as more of a heavier industry, pulp and paper, chemical services provider. This Diversey deal gets it more into hygiene, which is obviously a top pick given the pandemic we just went through.”
So far, the Xylem and Solenis deals are the largest acquisitions from water industry players in 2023.
“They’re a little bit unique in many respects,” said Tisdale. “We’re more used to seeing more couple-hundred-million-dollar deals, if not much smaller than that.”
Badger Meter acquires Syrinix
On Jan. 5, 2023, Badger Meter announced that it had acquired Syrinix Ltd., a provider of smart water monitoring solutions, for roughly £15 million ($18.3 million USD).
Badger Meter provides water solutions across flow measurement, quality, and other system parameters. United Kingdom-based Syrinix specializes in high-frequency pressure monitoring and leak detection for water distribution and collection networks, and the company provides a cloud-based software platform for data management.
“We are pleased to add the hardware-enabled software capabilities of Syrinix into our smart water solutions portfolio,” said Kenneth C. Bockhorst, chairman, president, and chief executive officer of Badger Meter, in the announcement. “I look forward to working alongside the talented Syrinix team to further our aim to preserve the world’s most precious resource.”
H2M acquiring Crew Engineers
H2m architects + engineers (H2M), a consulting and design firm, acquired Crew Engineers Inc. on Jan. 27, 2023.
H2M said that the Crew Engineers team would have a primary focus in H2M’s water, wastewater, environmental, and civil engineering disciplines.
“Crew Engineers has an exceptional reputation in the water, wastewater, environmental, and civil engineering design sector,” said James Neri, senior vice president and discipline director of water at H2M, in the company’s announcement. “The firm has always been committed to providing the highest level of service to their clients which aligns seamlessly with H2M’s core values, making this partnership a perfect fit.”
A multi-year trend
The water sector has been seeing a large number of mergers and acquisitions since 2021.
That year, Bluefield Research had recorded the highest number of such transactions since the last better half of the decade, according to Tisdale. He expects a greater shift toward multinational acquisitions in the future.
“The dollar’s really strong, so we’re interested to see what happens with the deployment of the dollar outside the U.S.,” said Tisdale. “We’ve seen companies like Tetra Tech going to the end of the U.K. market buying another engineer firm. We’re likely to see a little more of that happening. If you’re well-capitalized and you’re looking to go abroad, now might be a good time for that.”
Other notable acquisitions in 2023 include:
- VLS Environmental Solutions announced that it would acquire Texas Molecular on Jan. 10.
- New Mexico Water Service announced the acquisition of Lake Section Water Company on Jan. 26
- Flowserve announced that it would acquire Velan on Feb. 16 for $245 million.
- Axius Water acquired Napier Reid on Feb. 22.
- Integrated Water Services acquired Hyperion International Technologies on March 7.
- Aetos Capital announced that it would acquire consulting firm WestWater to develop a new water-focused fund on March 9.
“I think the deal flow may soften a bit because of the cost of capital and broader macro-economic conditions, but I think the market of water is strong overall,” concluded Tisdale.