Illustration: Gabriella Turrisi/Axios
Xylem, a D.C.-based water tech supplier, agreed to acquire the water treatment company Evoqua in a deal valued at $7.5 billion, including debt.
Why it matters: Water is difficult to monetize — but it's a space that's drawing investor interest as climate change worsens water scarcity.
Of note: Xylem generated about $5.3 billion in revenue in fiscal 2022; Evoqua about $1.7 billion.
- Two Evoqua directors will join the Xylem board. The deal is expected to close midyear.
What they're saying: "Water scarcity, efficiency and availability — that goes across the entire spectrum of what we do," Xylem president and CEO Patrick Decker tells Axios.
Zoom in: As for synergies, the acquisition will significantly expand Xylem's access to industrial customers as well as the company's U.S. footprint.
- Industry generated about 82% of Evoqua's end-market revenue, compared to about 35% for Xylem.
- In terms of footprint, most of Evoqua's business is focused in the U.S., versus less than half for Xylem.
- Procurement and streamlining duplicative corporate functions were areas of focus, too.
What we're watching: Whether this deal opens the faucet for more transaction activity in the water sector.