Market’s irrational H2O aversion risks M&A drought

Evoqua Water Technologies

24/01/2023 10:55

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are his own.)
    By Antony Currie
       MELBOURNE, Jan 24 (Reuters Breakingviews) - Cost cuts,
executive nous, and the need to invest in water security should
ensure Xylem’s $7.5 bln purchase of Evoqua keeps benefits
flowing to the bottom line. Yet 8% of the buyer’s value
evaporated. That may prompt architects of other smart-looking
deals to pull the plug.
    Full view will be published shortly.
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    CONTEXT NEWS 
    Shares in Xylem closed down about 8% on Jan. 23 after the
U.S.-based water technology company unveiled that it had agreed
to buy smaller rival Evoqua Water Technologies in an all-stock
deal valuing the target’s enterprise at $7.5 billion.
    Xylem offered 0.48 of its shares for each Evoqua share,
equating to a 29% premium based on the two companies’ closing
prices on Jan. 20.
    Xylem expects to cut $140 million in annual costs within
three years as part of the transaction.
 (Editing by Una Galani and Pranav Kiran)
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