AquaVenture (WAAS, $27.18) shares get rating downgrades, following $1.1 billion acquisition deal from Culligan International

Water-treatment company AquaVenture’s stock  was downgraded by two investment banks, after the announcement of an acquisition.

On Monday, it was revealed that Culligan International, backed by  private-equity firm Advent International, would acquire AquaVenture for $27.10 a share cash, or about $1.1 billion, including AquaVenture's net debt. The deal, already approved by AquaVenture's board , is expected to close in early April.

Raymond James analyst Pavel Molchanov lowered his rating  on the stock to market perform from outperform. 

Molchanov  mentioned in a note to investors that Culligan is "a very logical buyer” and  it is unlikely that any other firms will engage in a bidding war.

The analyst indicated that he was expecting continued strong M&A activity in the water industry in 2020. He pointed out that 63 buyouts were made in the space in 2019 to date, which is 50% higher compared to 2018. According to him, the space has various potential buyers and sellers for M&As and there should not be any major bidding war expect for very exceptional cases.

On the other hand, Canaccord Genuity analyst Chip Moore downgraded Aquaventure shares to hold from buy while mentioning,  "Culligan paid a reasonable price for AquaVenture (though just shy of our prior $28 price target)."

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Sergey Savastiouk|Expert

Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.