REG - Water Intelligence - Strategic Acquisition in Ireland

Water IntelligenceAnnouncement

09/07/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240709:nRSI5695Va&default-theme=true

RNS Number : 5695V  Water Intelligence PLC  09 July 2024

 

 

Strategic Acquisition of Feakle Gas and Plumbing in Ireland

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 the acquisition of Feakle Gas and Plumbing Limited, a company
operating in Ireland ("FG&P" or the "Acquisition"), by the Group's Water
Intelligence International ("WII") subsidiary.

The transaction is risk-adjusted, financially accretive to shareholders and a
strong foundation from which to execute a full range of municipal, commercial
and residential water and wastewater solutions in Ireland and to launch
operations throughout the EU.  The market opportunity is significant.  The
OECD previously estimated that the EU by 2030 will need investment spending of
approximately €290 billion to meet water and sanitation needs under
Directives covering Drinking Water and Urban Waste Water Treatment. Recent
market research raises the forecast to a total of US$476 billion in water
& wastewater infrastructure CAPEX from 2024 to 2030.  Today's transaction
is a strategic step in the Group's growth plan to capture such demand.

Key financial terms of the Acquisition

The transaction is structured as a purchase of 100% of the issued share
capital of FG&P by Water Intelligence Leak Detection and Repair, WII's
Irish subsidiary.  The purchase price of €2.32 million in cash is based on
the FG&P's 2023 Accounts of €3.7 million in sales and adjusted operating
profits of €550,000.  The purchase price is risk-adjusted by being
structured as a four-year earnout with incentives for strong growth of both
revenue and profits above the baseline 2023 Accounts.

The initial consideration for FG&P is €500,000 plus payments in each of
the next four years of €435,000 based on a minimum operating profit in each
of the next four years of €425,000. A further €75,000 payment will be made
based on additional sales of €650,000 from delivering municipal, commercial
and residential solutions offered by WII.  Such additional sales are new
business lines separate from the core FG&P business and geared to be
synergistic with WII's expansion, such as with respect to deploying Pulse,
WII's proprietary sewer diagnostic product.  Given the focus in the EU on
waste water, WII looks forward to working with the FG&P team.

The initial and future consideration for the Acquisition will be funded from
the Group's existing balance sheet.

Strategic rationale for the Acquisition

The Group currently operates across the US, and in the UK, Australia and
Canada. It also executes projects in various countries in the EU. With this
transaction, the Group is expanding its multinational operating footprint.
Market demand in Ireland for water and wastewater solutions is strong as
various EU Directives are being implemented as noted above.  From a strong
base in Ireland, the Group is now better positioned to expand its operations
in the EU.

FG&P operates in central Ireland between Shannon and Dublin and serves
residential and commercial markets with a mix of service and construction
plumbing.  It has a critical mass of skilled professionals around which to
integrate minimally-invasive leak detection solutions provided by American
Leak Detection ("ALD") and commercial and municipal solutions provided by
WII.

Executive Chairman, Dr. Patrick DeSouza commented: "We are excited by the
growth opportunities available to the Group in Ireland and the EU.  We
believe that the FG&P team and its leadership will create significant
value for our shareholders.  Given the proximity of Ireland to our existing
operations in the UK, our teams will be able to work together seamlessly as we
expand our international operations.

In our recently published Annual Report, the Chairman's Statement points to
our capital allocation plan for the Next 50 and our decision-making approach
to managing investment risk by building on what we already execute well.
 Today's transaction is the first delivery and in-line with this
risk-adjusted approach: (i) FG&P operations are geographically close to
our WII base in the UK thus enabling ready support; (ii) FG&P's team has
the capabilities to deploy WII technologies to a broad customer base in
Ireland; and (iii) our earn-out structure helps with managing risk.  As a
result, we still have significant available resources to further execute our
strategic growth plan."

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part
of UK law by virtue of the European Union (Withdrawal) Act 2018. The
information is disclosed in accordance with the Company's obligations under
Article 17 of the UK MAR. Upon the publication of this announcement, this
inside information is now considered to be in the public domain

Enquiries:

Water Intelligence plc

Laura Bass, Director, Strategic
Finance
                                   Tel: 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

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  ACQRPMFTMTMMBFI