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)."
a provider of water purification services
Industry WaterUtilities