Xylem to buy Evoqua Water for $52.89/share in all-stock deal

aristotoo

Evoqua Water (NYSE:AQUA) +13.8% pre-market Monday after Xylem (NYSE:XYL) agreed to acquire the company in an all-stock deal that reflects an implied enterprise value of ~$7.5B.

The two companies generated more than $7B in combined revenue in the 12-months ended September 30, 2022, with $1.2B in adjusted EBITDA; they said the combination will unlock new growth opportunities and should deliver $140M in run-rate cost synergies within three years.

The combined company will be led by Xylem (XYL) President and CEO Patrick Decker, and two current members of the Evoqua (AQUA) board will join Xylem’s board.

Evoqua (AQUA) shareholders will receive 0.480 shares of Xylem (XYL) for each Evoqua share, representing a value of $52.89/share, or a 29% premium based on closing prices as of January 20.

Upon closing, Xylem (XYL) shareholders will own ~75% and Evoqua (AQUA) shareholders will own ~25% of the combined company on a fully diluted basis.

Xylem (XYL) has shown good revenue growth but is overvalued, Prasanna Rajagopal writes in an analysis published on Seeking Alpha.