The water sector is experiencing a transformative phase marked by significant mergers and acquisitions (M&A). This trend signals ongoing momentum in an industry that is vital and rapidly evolving. As water utilities and technology providers grapple with challenges posed by climate change, regulatory pressures, and aging infrastructure, M&A has emerged as a strategic tool for businesses aiming to innovate, scale, and expand into new markets. The notable transactions in 2024 reflect key trends that are shaping the future of the sector.
A Promising Start to 2024
The year commenced with optimism following a moderated 2023. According to Bluefield Research, 54 deals were reported in the first quarter of 2024, indicating steady activity consistent with long-term averages. In 2023, there were 372 deals, slightly below the 387 transactions recorded in 2022 and just under the five-year average. The 2024 pipeline has been energized by stabilizing macroeconomic conditions, pent-up investor demand, and attractive market opportunities. Industry players are leveraging these conditions to position themselves for growth, as evidenced by early-year activities.
Key Strategic Moves
One of the most significant developments in early 2024 was DuPont’s decision to spin off its $1.5 billion Water business into a standalone publicly traded company. This strategic move reflects a broader trend among conglomerates to streamline operations and focus on core strengths, similar to Danaher’s spinout of Veralto in 2023. This spin-off is expected to grant DuPont’s Water business the flexibility to pursue growth and targeted M&A opportunities.
Another noteworthy restructuring was announced by Georg Fischer (GF), which decided to concentrate exclusively on Water and Flow Solutions. Following its acquisition of Uponor in November 2023, now rebranded as GF Building Flow Solutions, GF has solidified its position as a global leader in sustainable water and flow solutions. This acquisition allows GF to tackle critical challenges in industrial flow processes, urban water management, and energy efficiency in buildings. To support this strategic shift, GF divested its non-core businesses, including the sale of GF Machining Solutions to United Grinding Group for CHF 630-650 million.
Insights from Industry Experts
In a recent Bluefield Research podcast titled “The Future of Water,” Keith Hays, VP & Managing Director at Bluefield Research, discussed Georg Fischer’s reorganization. He noted, “It is an interesting continuation of a trend we have seen in companies like Pentair and Veralto that have carved out and created water-centric units. Georg Fischer has disposed of some of its lower growth units and has tapped into what is attractive about water. Water is super stable and touches on all parts of the economy, making this sector more stable than Georg Fischer’s machinery division.”
Notable Acquisitions in Water Solutions
Ecolab also made headlines by acquiring Barclay Water Management, a provider of water safety and digital monitoring solutions for industrial and institutional clients in the northeastern United States. Barclay’s proprietary iChlor Monochloramine System, designed for treating Legionella bacteria in drinking water systems, enhances water safety and asset longevity while providing real-time water chemistry monitoring. With 2023 sales of approximately $50 million, this acquisition complements Ecolab’s water solutions portfolio.
In June 2024, Grundfos, a leader in advanced pump solutions and water technologies, acquired Culligan’s Commercial & Industrial division in Europe. This strategic move strengthens Grundfos’ position in the European water treatment market and complements its previous acquisitions, including EUROWATER and MECO. With a turnover exceeding €100 million in 2023, Culligan’s business enhances Grundfos’ portfolio and regional presence, aligning with its commitment to addressing global water challenges.
The Role of Private Equity
Private equity continues to play a crucial role in shaping the water sector in 2024, particularly in digital solutions. Swedish investment firm EQT Group acquired AMCS Group, an Irish software company specializing in waste and water management applications, for $1.4 billion. This deal highlights the growing strategic value of digital water technologies, enabling more efficient operations in both municipal and industrial contexts. EQT’s investment underscores a broader trend of private equity focusing on innovative, data-driven companies within the water sector.
In another significant move, XPV Water Partners sold Isle Utilities, a global innovation consultancy, to Palatine, a UK-based private equity firm. Isle Utilities specializes in bridging the gap between early-stage water technologies and market adoption, helping utilities tackle sustainability and climate challenges. This acquisition further emphasizes private equity’s increasing focus on fostering innovation within the water sector.
International Expansion and New Markets
The final quarter of 2024 witnessed a surge in international activity, with major players expanding into new markets and enhancing their digital capabilities. Xylem Inc., a global leader in water solutions, acquired Heusser Water Solutions AG, its longstanding Swiss distributor, to deepen its presence in key growth markets. This move aligns with Xylem’s strategic priorities of delivering innovative and sustainable solutions to utilities and industries.
Additionally, Xylem expanded its digital water capabilities by acquiring a majority stake in Idrica, a Spain-based leader in water data management and analytics. By integrating Idrica’s platform into Xylem Vue, the company aims to provide utilities with real-time insights to address challenges such as water loss and aging infrastructure.
A Positive Outlook for the Water Sector
The water sector’s M&A activity has underscored several key themes that continue to shape the industry. Digital transformation remains a central focus, with companies prioritizing investments in data-driven solutions to tackle global challenges like water scarcity and climate resilience. Private equity’s role in fostering innovation and consolidating fragmented markets has proven strategically important to the sector. Geographical expansion into high-growth regions, particularly in Asia-Pacific and Europe, remains a priority for leading firms seeking to capture new opportunities and strengthen their global presence. Overall, the outlook for the water sector in 2025 remains positive, driven by investment in developed markets and regulatory support.
Reference
1.2025 Outlook: Water
https://www.dpimc.com/articles/2025-outlook-water
2.Grundfos Revolutionizes Water Management with Acquisition of Metasphere Smart Water Sensors
3.List of Xylem Water Solutions’s Acquisitions
