Acquisitions and Divestitures |
9 Months Ended |
|---|---|
Sep. 30, 2026 | |
| Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] | |
| Acquisitions and Divestitures | Acquisitions and Divestitures 2026 Business Combinations Cornell Pump and Roper Pump On August 10, 2026, the Company entered into a definitive agreement with Indicor, LLC and the other parties thereto to acquire, through a wholly-owned subsidiary of the Company, 100% ownership of the Cornell Pump and Roper Pump businesses, which specialize in highly engineered pumping technologies. The acquisition expands the Company's industrial pumping capabilities and strengthens its presence in key industrial and municipal applications in North America. The purchase price is approximately $1,460 million, subject to customary adjustments for working capital and other matters, which the Company intends to finance in part using proceeds from its issuance of senior unsecured notes on September 29, 2026. Refer to Note 12, Credit Facilities and Debt, for additional information. The acquisition will be included in the Water Infrastructure segment and is expected to close in the fourth quarter of 2026, subject to receipt of required regulatory approvals and other customary closing conditions. WaterFleet Intermediate Holdings, Inc. On September 2, 2026, the Company acquired 100% ownership interest in WaterFleet Intermediate Holdings, Inc. and its subsidiaries (collectively, "WaterFleet"), a leading provider of mobile water and wastewater utility services and workforce relief solutions. The acquisition expanded the breadth of the Company's service offerings in North America. Our condensed consolidated financial statements include WaterFleet's results of operations within the Water Solutions and Services segment from the date of acquisition. The total fair value of consideration paid at closing was $217 million, which also represents the purchase price, net of cash acquired, and remains subject to working capital and other customary adjustments. As of September 30, 2026, preliminary purchase price allocation consisted primarily of $111 million in goodwill and $65 million for customer relationships and other intangible assets. The identifiable intangible assets were valued using the multi-period excess earnings ("MPEE") method, the relief from royalty ("RFR") method, or the with and without method, all of which are forms of the income approach. The amount of goodwill recognized in the acquisition is not deductible for U.S. income tax purposes and is primarily attributable to management know-how and to costs and revenue synergies expected from combining the operations of WaterFleet with Xylem. TriOS Mess-und Datentechnik GmbH On July 1, 2026, the Company acquired 100% ownership interest in TriOS Mess-und Datentechnik GmbH and its subsidiaries (collectively, "TriOS"), a leading provider of optical sensing and measurement systems for water quality monitoring across utilities, industry, and environmental research. The integration of TriOS's advanced sensing instruments with the Company's analytical instrumentation platform is expected to enhance real-time visibility into water conditions across our systems. Our condensed consolidated financial statements include TriOS' results of operations within the Measurement and Control Solutions segment from the date of acquisition. The total purchase price is $219 million ($210 million, net of cash acquired), of which $216 million ($207 million, net of cash acquired) was paid at closing. The purchase price remains subject to working capital and other customary adjustments. As of September 30, 2026, preliminary purchase price allocation consisted primarily of $155 million in goodwill and $55 million for customer relationships and other intangible assets. The identifiable intangible assets were valued using the MPEE method, the RFR method, or the with and without method, all of which are forms of the income approach. The amount of goodwill recognized in the acquisition is not deductible for income tax purposes and is primarily attributable to management know-how and to costs and revenue synergies expected from combining the operations of TriOS with Xylem. The final determination of the fair value of certain assets and liabilities from the above acquisitions will be completed as soon as the necessary information becomes available but no later than one year from the acquisition date. 2025 Business Combinations Pac Machine Company, Inc. On December 2, 2025, the Company acquired 100% ownership interest in Pac Machine Company, Inc. ("Pac Machine"), a leading distributor specializing in the sale, rental and service of pumps, generators, and other dewatering equipment for mining, construction, agriculture, energy and marine sectors. The acquisition strengthens the Company's presence in Northern California and Nevada, while providing synergy opportunities. Our condensed consolidated financial statements include Pac Machine's results of operations within the Water Solutions and Services segment. The total purchase price was $66 million ($62 million, net of cash acquired), of which $54 million ($50 million, net of cash acquired) was paid at closing. The consideration transferred includes $3 million related to the non-cash settlement of a preexisting receivable owed by the acquiree to the Company. The remaining consideration of $9 million will be paid over the next four years, subject to customary holdback provisions. As of September 30, 2026, preliminary purchase allocation includes intangible assets totaling $27 million, consisting of customer relationships valued using the MPEE method, and goodwill totaling $30 million. The amount of goodwill recognized in the acquisition is not deductible for U.S. income tax purposes and is primarily attributable to costs and revenue synergies expected from combining the operations of Pac Machine with Xylem. The final determination of the fair value of certain assets and liabilities will be completed as soon as the necessary information becomes available but no later than one year from the acquisition date. EMX Holdings, Inc. On July 23, 2025, the Company acquired 100% ownership interest in EMX Holdings, Inc. and its subsidiary (collectively, "EnviroMix"). EnviroMix is headquartered in South Carolina, U.S., and provides mixing and process control products and services to municipal and industrial customers. This acquisition expands the Company's treatment offerings and provides synergy opportunities. The operating results of EnviroMix have been included in the Company's results of operations since the acquisition date within the Water Infrastructure segment. The total fair value of consideration transferred was $106 million, which was paid in cash on the closing date. The fair value of assets and liabilities acquired resulting from the purchase price allocation consisted primarily of $74 million in goodwill and $34 million for customer relationships and other identifiable intangible assets. The identifiable intangible assets were valued using the MPEE method, the RFR method, or the with and without method, all of which are forms of the income approach. The goodwill recognized in the acquisition is not deductible for U.S. income tax purposes and is primarily attributable to management know-how and the costs and revenue synergies expected from combining the operations of EnviroMix with Xylem. Simply Clean Air and Water, Inc. On January 31, 2025, we acquired 100% ownership interest in Simply Clean Air and Water, Inc. ("Simply Clean"), a water service company that specializes in high-purity water systems for life sciences and pharmaceutical markets, for the net cash acquisition price of $7 million. The company is headquartered in Connecticut, U.S. with 20 employees. Our condensed consolidated financial statements include Simply Clean's results of operations within the Water Solutions and Services segment. 2025 Asset Acquisition Vacom Systems, LLC On April 1, 2025, we acquired Vacom Systems, LLC ("Vacom"), a wastewater treatment company that specializes in non-fouling, non-scaling evaporator and crystallizer systems, headquartered in Utah, U.S. The transaction included total cash consideration of $42 million, of which $37 million was paid at closing, $2 million was paid during the second quarter of 2026, and the rest is expected to be paid during the fourth quarter of 2026. Additionally, the transaction consideration contained an earn out of 5% royalty on future revenue generated in connection with Vacom's proprietary technologies during the first five years following the acquisition. The earn out has a maximum pay out of $25 million. The Vacom transaction was accounted for as an asset acquisition because substantially all of the fair value of gross assets acquired were concentrated in its developed technology. On the acquisition date, the developed technology recognized in the condensed consolidated balance sheet was $49 million. The developed technology has a useful life of fifteen years and it is being amortized over its useful life on a straight-line basis within the Water Solutions and Services segment. 2026 Divestitures On May 26, 2026, we completed the divestiture of our previously held-for-sale international metering business, part of the Measurement and Control Solutions segment. As of September 30, 2026, the preliminary fair value of total consideration was $73 million ($68 million, net of cash transferred), including a third quarter adjustment to the estimated post-closing working capital consideration. Total consideration includes $63 million in cash ($58 million, net of cash transferred) and a note receivable with a fair value of $10 million. The post-closing working capital adjustment has not been finalized and remains subject to further adjustments pursuant to the terms of the purchase agreement. As a result of the sale, the Company recognized a cumulative loss of $44 million, including $23 million recognized in 2025 and $21 million recognized in 2026, of which $7 million was recognized in the third quarter of 2026. During the nine months ended September 30, 2026, the Company also completed certain other divestitures, which generated aggregate cash proceeds, net of cash transferred, of approximately $37 million, of which $30 million was recognized in the third quarter of 2026, and resulted in a cumulative net gain of $4 million, of which $2 million was recognized in the current quarter. 2025 Divestiture On February 7, 2025, we completed the divestiture of our previously held-for-sale Evoqua Magneto business, which was part of the Water Infrastructure segment, for a cash selling price of $61 million ($48 million, net of cash transferred). As a result of the sale, we recorded a loss of $10 million in the first quarter of the prior year, partially offset by a $2 million favorable final working capital adjustment recorded in the third quarter of the prior year, resulting in a total loss of $8 million. Gains and losses on the above divestitures presented on the condensed consolidated income statement within "Loss on sale of businesses".
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