Strategic Acquisition of
Feakle Gas and Plumbing in Ireland
Water Intelligence plc (AIM: WATR.L)
("Water Intelligence" or "Group"), a leading multinational provider
of precision, minimally-invasive leak detection and remediation
solutions for both potable and non-potable water
is pleased to announce the acquisition of Feakle
Gas and Plumbing Limited, a company operating in Ireland
("FG&P" or the "Acquisition"), by the
Group's Water Intelligence International ("WII")
subsidiary.
The transaction is risk-adjusted,
financially accretive to shareholders and a strong foundation from
which to execute a full range of municipal, commercial and
residential water and wastewater solutions in Ireland and to launch
operations throughout the EU. The market opportunity is
significant. The OECD previously estimated that the EU by
2030 will need investment spending of approximately €290 billion to
meet water and sanitation needs under Directives covering Drinking
Water and Urban Waste Water Treatment. Recent market research
raises the forecast to a total of US$476 billion in water &
wastewater infrastructure CAPEX from 2024 to 2030. Today's
transaction is a strategic step in the Group's growth plan to
capture such demand.
Key
financial terms of the Acquisition
The transaction is structured as a
purchase of 100% of the issued share capital of FG&P by Water
Intelligence Leak Detection and Repair, WII's Irish
subsidiary. The purchase price of €2.32 million in cash is
based on the FG&P's 2023 Accounts of €3.7 million in sales and
adjusted operating profits of €550,000. The purchase price is
risk-adjusted by being structured as a four-year earnout with
incentives for strong growth of both revenue and profits above the
baseline 2023 Accounts.
The initial consideration for
FG&P is €500,000 plus payments in each of the next four years
of €435,000 based on a minimum operating profit in each of the next
four years of €425,000. A further €75,000 payment will be made
based on additional sales of €650,000 from delivering municipal,
commercial and residential solutions offered by WII. Such
additional sales are new business lines separate from the core
FG&P business and geared to be synergistic with WII's
expansion, such as with respect to deploying Pulse, WII's proprietary sewer
diagnostic product. Given the focus in the EU on waste water,
WII looks forward to working with the FG&P team.
The initial and future consideration
for the Acquisition will be funded from the Group's existing
balance sheet.
Strategic rationale for the Acquisition
The Group currently operates across
the US, and in the UK, Australia and Canada. It also executes
projects in various countries in the EU. With this transaction, the
Group is expanding its multinational operating footprint. Market
demand in Ireland for water and wastewater solutions is strong as
various EU Directives are being implemented as noted above.
From a strong base in Ireland, the Group is now better
positioned to expand its operations in the EU.
FG&P operates in central Ireland
between Shannon and Dublin and serves residential and commercial
markets with a mix of service and construction plumbing. It
has a critical mass of skilled professionals around which to
integrate minimally-invasive leak detection solutions provided by
American Leak Detection ("ALD") and commercial and municipal
solutions provided by WII.
Executive Chairman, Dr. Patrick
DeSouza commented: "We are excited by the growth opportunities
available to the Group in Ireland and the EU. We believe that
the FG&P team and its leadership will create significant value
for our shareholders. Given the proximity of Ireland to our
existing operations in the UK, our teams will be able to work
together seamlessly as we expand our international
operations.
In our recently published Annual
Report, the Chairman's Statement points to our capital allocation
plan for the Next 50 and
our decision-making approach to managing investment risk by
building on what we already execute well. Today's transaction
is the first delivery and in-line with this risk-adjusted approach:
(i) FG&P operations are geographically close to our WII base in
the UK thus enabling ready support; (ii) FG&P's team has the
capabilities to deploy WII technologies to a broad customer base in
Ireland; and (iii) our earn-out structure helps with managing
risk. As a result, we still have significant available
resources to further execute our strategic growth plan."
The
information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part
of UK law by virtue of
the European Union (Withdrawal)
Act 2018. The information is disclosed in accordance with the
Company's obligations under Article 17 of
the UK MAR. Upon the publication
of this announcement, this inside information is now considered to
be in the public domain
Enquiries:
Water
Intelligence plc
Laura Bass, Director, Strategic
Finance
Tel: Tel: +1 203 584-8240
Grant Thornton UK LLP - Nominated
Adviser
Tel: +44 (0) 20 7383 5100
Philip Secrett
Harrison Clarke
Ciara Donnelly
RBC
Capital Markets - Joint Broker
Tel: +44 (0)20 7653 4000
Jill Li
Elizabeth Evans
Daniel Saveski
Dowgate Capital Ltd - Joint Broker
Tel: +44 (0)20 3903 7715
Stephen Norcross
