Milwaukee-based A.O. Smith Corp. today acquired Texas-based water treatment system developer Aquasana Inc. for $87 million.
Aquasana, previously owned by private equity firm L Catterton, designs, assembles and markets whole-house treatment systems, home and mobile drinking water systems and shower filters for a direct U.S. consumer base. Its projected 2016 revenue is $44 million. It has about 100 employees at two Texas facilities.
A.O. Smith designs, manufactures and distributes water heaters for a global market. It is headquartered in Milwaukee but manufactures its products outside the state. A.O. Smith has about 13,400 employees globally, 110 of whom are in Milwaukee. Its 2015 revenue was $2.54 billion. Chief executive officer Ajita Rajendra has been seeking acquisitions on which to invest about $800 million since he joined the company in 2013.
The acquisition, funded with$400 million from A.O. Smith’s revolving credit facility on a debt-free basis, will allow A.O. Smith to extend its reach into the $2 billion U.S. residential water treatment market, which includes water softeners and filters.
The company expects to realize $25 million to $30 million in annual revenue synergies over the next two or three years through cross-selling and global expansion. The acquisition is expected to incur $1 million in one-time after-tax purchase accounting charges and professional fees.
“This acquisition fits squarely within our stated strategy to expand our core product offerings to new geographies that present growth opportunities,” Rajendra said. “We believe the water quality needs for U.S. consumers are evolving as aging water infrastructure and consumer awareness highlight the increasing number of unhealthy drinking water situations. Our acquisition of Aquasana expands our growing global water treatment business, with expected combined proforma 2016 revenues of approximately $200 million.”
“We are extremely excited about the benefits of combining with such a compelling partner like A. O. Smith,” said Todd Bartee, CEO of Aquasana. “This combination will enhance Aquasana’s reach to a much broader base of customers and extend our healthy living brand, as well as enhance the positive future prospects for our employees, customers and suppliers.”