Xylem acquires Evoqua in US$7.5bn all-stock transaction

Global water technology company Xylem has acquired Evoqua, a water treatment solutions provider, in an all-stock transaction with an implied enterprise value of approximately US$7.5bn.

Xylem and Evoqua generated over $7bn in combined revenue in the 12-month period ending 30 Sep 2022, with $1.2bn in adjusted EBITDA. The combination unlocked new growth opportunities and is expected to deliver run-rate cost synergies of $140m within three years, driven by scale efficiencies in procurement, network optimisation and corporate costs. In addition, the transaction allows Xylem to maintain its balance sheet, which provides the combined company with strategic flexibility and optionality.

The transaction, which is anticipated to close in mid-2023, is subject to approval by shareholders of Xylem and Evoqua. Upon closing, Xylem shareholders will own approximately 75% and Evoqua shareholders will own approximately 25% 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. 

“Solving the world’s water challenges has never been more urgent. Our acquisition of Evoqua creates a global platform to address water scarcity, affordability and resilience at greater scale,” said Decker. “The combined company delivers a portfolio of advanced technologies, integrated services and application expertise across the water cycle.”

“Together, our complementary businesses will be positioned to help our customers and communities tackle their most challenging water needs.”

With its network of service professionals and access to a number of industrial markets with revenue streams, Evoqua offers digitally enabled offerings, outsourcing mission-critical water treatment systems for customers in sectors such as life sciences, microelectronics, power and food and beverage. The company also aids in the remediation of emerging contaminants, including per- and polyfluoroalkyl substances (PFAS).

Ron Keating, Evoqua’s president and CEO, said, “Together with Xylem, we will drive innovation on a larger scale for our customers, positioning us to create even more value for our stakeholders.”