Evoqua Water’s shares soar after Xylem’s full share buyback price accounts for 29% of the premium

Shares of Evoqua Water Technologies Corp.
water,
+2.04%

jumped 14.6% to a nine-month high in premarket trading on Monday, after the water and wastewater treatment company agreed to be acquired by Xylem Inc.
XYL,
+1.43%

in a $7.5 billion all-stock deal. Shares of Xylem fell 9.7% to a three-month low. Under the terms of the agreement, Evoqua shareholders will receive 0.480 Xylem shares for each Evoqua share they own. Based on the stock’s closing price Friday, valuation of Evoqua stock at $52.89 implies a 28.9% premium. The purchase price per share implies a market capitalization of Evoqua of $6.44 billion. The deal is expected to reach $140 million in synergies per share within three years of closing, slated for mid-2023. Patrick Decker, CEO of the company “Our acquisition of Evoqua creates a transformative global platform to address water scarcity, affordability and resilience at a larger scale,” said Xylem. Shares of Evoqua rose 4.9% in the 12 months through Friday, while shares of Xylem rose 2.9% and the S&P 500
SPX,
+1.89%

lost 9.7%.