Global warming, along with a protracted drought in the U.S. southwest, is driving up both the price of water and water technology.
The $7.5 billion all-stock deal was announced Monday.
About 65% of the United States is experiencing drought, according to the U.S. Drought Monitor.
Drought Amps up Investor Interest in Water Tech Companies
Xylem says it expects the purchase to deliver $140 million in cost synergies within three years. The deal is set to close in mid-2023. If the transaction clears regulatory hurdles, Xylem shareholders will own 75% of the combined company and Evoqua shareholders will own 25% of the company.
“Water stocks, many of them utilities, have traditionally received little attention from investors. But supply-demand dynamics have intensified over the past year, placing increased attention on suppliers of water purification and treatment, desalination, and other related technologies.” investors.com reported.
The acquisition reflects the fact that water managers for communities, businesses, and farms are increasingly desperate to acquire water — or save water —at reasonable prices. That’s because traditional water sources such as melting snowpack and ground pumping are dwindling under the pressure of global warming.