Total number of deals by segment and disclosed valuation tools. Image credit: Bluefield Research
According to Bluefield Research’s latest report, titled “Water Mergers & Acquisitions: Key Trends in a Changing Global Landscape”, mergers & acquisitions (M&A) in the global water industry went over US$20 billion in 2016, driving a three-year total valuation of announced deals and acquisitions past the US$57 billion mark. Bluefield Research conducted in-depth analyses of 447 transactions since 2014, underlining vital shifts in the competitive landscape as organisation position themselves to better address the increasing municipal and industrial needs for water, and wastewater infrastructure solutions.
“The types of deals and breadth of companies building out positions by acquisition are positive signals for water sector growth,” Reese Tisdale, President of Bluefield Research, said. “Broader market forces, including poor water quality in Flint, growing population demands, and increasing risks to industrial company bottom-lines, whether they be in energy, power, brewing, or mining, underpin deal flow among companies angling to be at the forefront of this change.”
Since they began tracking company movements in 2014, 63 per cent of the deals Bluefield Research recorded quarterly have been concentrated on equipment, service, and technology companies, such as those focusing on membranes, meters, pipes, pumps, and engineering procurement construction (EPC) services. The remaining 37 per cent placed an emphasis on distribution assets and utility networks, including 113 investor-owned utility acquisitions in the United States (US), and the transfer of equity stakes in water treatment systems.
From 2014 to 2016, much of the activity could be traced to strategic buyers expanding their positions and presence across the water sector. Perched right at the top is the recent US$3.4 billion acquisition of GE Water & Process Technologies by Suez that underlined the opportunities for growth in the industrial water sector.
“We are also seeing heavy deal flow among engineering and construction firms, which play a pivotal role in water infrastructure projects,” Tisdale continued. “These companies are often diversified across multiple sectors, making Stantec’s 2016 acquisition of MWH Global unique. Because of MWH’s water sector focus, it thrust Canada-based Stantec into a global leadership role for water and wastewater services, overnight.”
Additionally, Bluefield Research discovered several key trends that indicate far-reaching impacts on the competitive water industry landscape. As Tisdale explained, “The one thing about water is that there is not one path for investment, and our ongoing analysis of the data reflects this.”
Source: Bluefield Research