Xylem To Acquire Evoqua in $7.5 Billion All-Stock Transaction

Xylem Inc., a leading global water technology company, and Evoqua, a leader in mission-critical water treatment solutions and services, this announced they have entered into a definitive agreement under which Xylem will acquire Evoqua in an all-stock transaction that reflects an implied enterprise value of approximately $7.5 billion.

As water risks rise in global importance, this transaction unites two companies with a shared focus on solving the world’s water challenges by addressing customers’ and communities’ most critical needs. Building on Xylem’s global leadership in water solutions and Evoqua’s leadership in advanced treatment solutions and services, the combined company will be uniquely positioned to develop and deliver an even more comprehensive offering of innovative solutions.

Evoqua, a leader in North America water treatment, complements Xylem’s distinctive portfolio of solutions with advanced water and wastewater treatment capabilities, an extensive network of service professionals and access to a number of attractive industrial markets with resilient, recurring revenue streams. 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 PFAs.

Xylem and Evoqua generated more than $7 billion in combined revenue in the 12-month period ending September 30, 2022, with $1.2 billion in adjusted EBITDA. The combination unlocks compelling growth opportunities and is expected to deliver run-rate cost synergies of $140 million within three years, driven by scale efficiencies in procurement, network optimization and corporate costs. In addition, the transaction allows Xylem to maintain its strong balance sheet, which provides the combined company with significant strategic flexibility and optionality.

"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,” said 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. Together, our complementary businesses will be even more strongly positioned to help our customers and communities tackle their most challenging water needs. We are excited about building the world’s most powerful platform for solving water alongside our Evoqua colleagues.”

“Joining forces with Xylem is an exciting opportunity for Evoqua and for our team members,” said Ron Keating, Evoqua president and CEO. “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. 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. Along the way, we have earned a reputation for quality, safety and reliability around the world. Together with Xylem, we will drive innovation on a larger scale for our customers, positioning us to create even more value for our stakeholders.”

Transaction Details

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.

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.

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, Xylem’s president and CEO. Two current members of the board of directors of Evoqua are expected to join Xylem’s board of directors.

Advisors

Lazard and Guggenheim Securities served as financial advisors and Gibson, Dunn & Crutcher LLP served as legal advisor to Xylem. Goldman Sachs & Co. LLC and BofA Securities served as financial advisors and Jones Day served as legal advisor to Evoqua.

A replay of the press briefing will be available on Investors Events | Xylem US and via telephone from January 23, 2023, 1:00 p.m. (ET) until January 30, 2023 at 11:59 p.m. (ET). The telephone replay will be available at +1 (800) 839-6975 or +1 (402) 220-6061.

Xylem  is a leading global water technology company committed to solving critical water and infrastructure challenges with innovation. The company delivered revenue of $5.2 billion in 2021. Xylem is attempting to create a more sustainable world by enabling its customers to optimize water and resource management and helping communities in more than 150 countries become water-secure. Xylem is also a major manufacturer of a variety of pumps. Join us at www.xylem.com.

Evoqua is a leading provider of mission critical water and wastewater treatment solutions, offering a broad portfolio of products, services and expertise to support industrial, municipal and recreational customers who value water. Evoqua has worked to protect water, the environment and its employees for more than 100 years. . Headquartered in Pittsburgh,  the company operates in more than 150 locations in nine countries. To learn more, visit www.evoqua.com.