The announcement in late November that Westech was being acquired Swire, a diversified global group headquartered in the UK, signaled another previously US owned water treatment company being purchased by foreign interests. This follows Wigen being purchased by Metawater earlier in the year and Tonka/US Water and Avista being purchased by Kurita in recent years. Metawater also purchased Aqua-Aerobic Systems in 2016. Suez bought the RO business of Lanxess in late 2020 making it a very active year for acquisitions by foreign companies (of course Lanxess is German).
It raises the question; why are foreign investors so interested in acquiring home grown US water treatment companies while large US companies are not? A few decades ago there was US Filter who quickly gobbled up a lot of water companies to create the US Filter empire before these were eventually sold off to Veolia in 1999…..we also had GE getting into the water treatment business in 2006 with the notable acquisition of membrane company Zenon which has since been sold to Suez. But in the last 10 years the purchases have mostly all been off shore with companies such as Suez, Veolia, Siemens, Xylem, Kurita and Metawater picking up the best of the local companies. The notable exception is Dupont’s acquisition spree in 2019 (see previous post).
I don’t know much about M&As but from my perspective it seems like US investors are not interested in the steady but unspectacular rate of growth of the water treatment market. The potential for water treatment products in a drier and more crowded planet is alluring, but those companies that have bought into it expecting water will be the ‘new oil’ have been disappointed by the long sales cycles for capital infrastructure and government procurement processes and rules. You can’t just buy say an OEM in the desalination market, cut costs, standardize the products, increase revenue then flip the company… In fact, for large custom capital equipment you standardize at your own peril as some large OEMs have found out when trying to cut costs then becoming uncompetitive for large custom projects.
I understand that as a small self-funded company you can only grow so much before outside investment is needed to provide the resources to take that next growth leap, but from a local industry perspective it is disappointing there are not large local companies willing to invest in so many successful local homegrown businesses.
The comments and opinions in this post are my own and not those of my employer.
