REG - Water Intelligence - Reacquisition and Sale of New Franchise

Water IntelligenceAnnouncement

09/05/2024 07:00

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RNS Number : 7043N  Water Intelligence PLC  09 May 2024

 

 

Reacquisition of Fresno, California Franchise

Sale of New Franchise in Albany and Saratoga, New York

Water Intelligence plc (AIM: WATR.L) ("Water Intelligence" or "Group"), a
leading multinational provider of precision, minimally-invasive leak detection
and remediation solutions for both potable and non-potable water, is pleased
to announce two transactions: the reacquisition of its franchise in Fresno,
California and the sale of a new franchise for Albany and Saratoga, New York,
both within the Group's American Leak Detection ("ALD") subsidiary.

Key terms of the Reacquisition

The purchase price of $2.9 million in cash is spread over two years and
includes all assets required to conduct operations, including trucks and
equipment. An initial $2.0 million is payable immediately and $0.9 million is
payable on the first anniversary of closing. The purchase price is based on
2023 pro forma of $1.8 million in revenue, $0.6 million in adjusted profit
before tax and total assets of $0.5 million.  The transaction is accretive
for the Group's shareholders.

Strategic rationale for the Reacquisition

Fresno is a sizeable, fast growing city in central California in the heart of
US agribusiness; an area in which market demand for water savings is strong
and getting to be a critical issue given changing climate conditions. The
operation is growing and expected to accelerate its trajectory with additional
corporate resources including the deployment of proprietary technologies, such
as ALD's Ditch Liner offering that will be helpful for agribusiness and Pulse
offering that provides for minimally-invasive diagnostics of municipal and
residential sewer blockages. As Fresno is located between the Bay Area and Los
Angeles in the Central Valley of California, the reacquisition reinforces the
Group's strategy of establishing regional corporate hubs in the US that fuel
growth in adjacent franchise locations.

Strategic rationale and terms for the Sale of the New Franchise

ALD is committed to building its franchise System. Albany and Saratoga are key
cities in upstate New York and comprise part of what is known as the Capital
District of New York. Albany is the state capital whilst Saratoga is the
center of a series of resort locations in upstate New York and known for horse
racing and wine growing. Several of ALD's national partners including
insurance and property management companies have sought ALD's national brand
and the quality of its solutions for this region. The upfront consideration
for launching this territory is $0.1 million.  ALD expects to receive royalty
income from sales starting in July after the completion of training.

More broadly, in terms of ALD's growth strategy, located between this new
franchise location in Albany and ALD's corporate location on the Canadian side
of Niagara Falls, there are several large cities - Buffalo, Syracuse, and
Rochester - in upstate New York around which ALD can deliver future growth,
whether through corporate operations or selling more franchises.

 

Executive Chairman, Dr. Patrick DeSouza commented: "We are very pleased with
the two transactions announced today because they reinforce our franchise
value proposition and brand. Moreover, both are expected to contribute to
sustainable organic growth for the Group. First, the franchise reacquisition
is an accretive transaction with plenty of scope for additional growth given
market demand for water savings in the center of US agribusiness. Second, our
new franchisee will help our brand deliver solutions around the capital of New
York state and will make a great launch point for further service delivery
throughout upstate New York. We are committed to our growth plans and see
additional opportunities ahead."

 

 

 

Enquiries:

Water Intelligence plc

Laura Bass, Director of Strategic Finance
                        Tel: +1 (203) 584-8240

 

Grant Thornton UK LLP - Nominated
Adviser                               Tel: +44
(0)20 7383 5100

Philip Secrett

Harrison Clarke

Ciara Donnelly

RBC Capital Markets - Joint Broker
                   Tel: +44 (0)20 7653 4000

Jill Li

Elizabeth Evans

Daniel Saveski

Dowgate Capital Ltd - Joint Broker
                       Tel: +44 (0)20 3903 7715

Stephen Norcross

 

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