Introductions to Evoqua Merges with Xylem
In a transformative move for the water technology sector, Evoqua Water Technologies has joined forces with Xylem Inc. in a landmark $7.5 billion all-stock transaction, finalized in May 2023. This merger unites two industry leaders to create the world’s largest pure-play water technology company, poised to address pressing global water challenges like scarcity, quality, and climate resilience. With a combined workforce of over 22,000 employees and a pro forma revenue of $7.3 billion in 2022, the partnership marks a significant step toward delivering innovative, sustainable solutions for communities and industries worldwide.
A Strategic Union for a Water-Stressed World
The merger of Evoqua Water Technologies and Xylem comes at a critical time. Water scarcity affects over 2 billion people globally, and aging infrastructure, coupled with climate change, is intensifying the need for advanced water management solutions. Xylem, a global leader in water infrastructure, and Evoqua, a North American powerhouse in water and wastewater treatment, bring complementary strengths to the table. Together, they form a comprehensive platform that spans the entire water cycle—from clean water delivery to wastewater treatment and reuse.
Patrick Decker, President and CEO of Xylem, emphasized the urgency of the merger: “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 an even greater scale.”
Evoqua’s expertise in advanced treatment solutions, including digitally enabled systems and PFAS remediation, enhances Xylem’s existing portfolio of water infrastructure and analytics. This synergy allows the combined company to serve high-growth sectors like life sciences, microelectronics, and food and beverage, while expanding its reach into industrial, municipal, and recreational markets.
Key Benefits of the Merger
The merger delivers several strategic advantages, positioning the new entity as a leader in the water technology space:
- Unmatched Portfolio: The combined company offers an unparalleled range of products and services, from pumps and analytics to advanced filtration and UV disinfection systems. For example, Evoqua’s ATG™ UV Wafer™ system is noted for its sustainability, reducing water usage and eliminating chemical reliance in aquaculture applications.
- Global Reach with Local Expertise: Xylem’s global footprint, spanning over 150 countries, complements Evoqua’s strong North American presence. This allows the company to deploy cutting-edge technologies worldwide, particularly in fast-growing markets like Latin America, the Nordics, and China.
- Cost Synergies: The merger is expected to generate $140 million in run-rate cost synergies within three years through efficiencies in procurement, network optimization, and corporate operations.
- Innovation and Sustainability: By integrating Evoqua’s digitally enabled solutions with Xylem’s data analytics and water reuse technologies, the company is well-equipped to innovate. A notable example is their 2024 initiative, Reuse Brew, a German pale lager made from recycled wastewater using Xylem’s ozone and filtration technologies.
- Leadership and Governance: The combined company is led by Patrick Decker, with two former Evoqua directors, Lisa Glatch and Lynn C. Swann, joining Xylem’s board. Their expertise in energy, environmental, and public company governance strengthens the company’s strategic direction.
Impact on the Water Technology Market
The acquisition has reshaped the water technology landscape, creating a dominant player that widens the gap with competitors like Grundfos, which reported $4.2 billion in revenue in 2021. The deal’s scale—valued at $7.5 billion, with Evoqua shareholders receiving 0.48 shares of Xylem stock per share—reflects a 29% premium based on January 2023 closing prices. Despite an initial 8% drop in Xylem’s stock price due to investor concerns over the valuation, the long-term outlook is promising, driven by minimal operational overlap and expected regulatory approval.
For utilities and municipalities, the merger means access to a broader suite of solutions to address infrastructure challenges. The combined company’s focus on sustainability, such as reducing water and energy consumption, aligns with global initiatives like the 2021 Infrastructure Investment & Jobs Act, which has spurred investment in U.S. water systems.
A Shared Vision for a Water-Secure Future
Evoqua Water Technologies, founded over a century ago in Pittsburgh, PA, has long been a trusted name in water treatment, serving 38,000 customers across nine countries. Its mission to “Transform Water. Enrich Life.” dovetails with Xylem’s commitment to “Let’s Solve Water.” Together, they aim to make communities more water-secure by optimizing resource management and tackling emerging contaminants like PFAS.
Ron Keating, former CEO of Evoqua, highlighted the cultural alignment: “Joining forces with Xylem is an exciting opportunity for Evoqua and our team members. This combination provides a platform to leverage our combined strengths and increase our impact.”
Looking Ahead
The merger positions Xylem and Evoqua Water Technologies to lead the charge in addressing global water challenges. With a robust portfolio, a global network, and a commitment to innovation, the combined company is set to drive meaningful change. From supporting aquaculture with sustainable UV systems to pioneering wastewater reuse in projects like Reuse Brew, the partnership is already demonstrating its potential to transform the industry.
As water issues continue to dominate global conversations, this merger signals a bold step toward a more resilient and sustainable future. For stakeholders, from customers to investors, the union of Xylem and Evoqua represents not just a business transaction but a shared mission to ensure water security for generations to come.
