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Water Intelligence reacquires Seattle franchise in $5.5m deal
6th Jan 2021 10:34
(Sharecast News) - Leak detection and remediation services company Water Intelligence has reacquired the Seattle franchise of its American Leak Detection (ALD) subsidiary, it announced on Wednesday.
The AIM-traded firm said it was the largest franchise reacquisition to date, describing it as a strategic move in tying together different growing business segments and creating efficiencies.
It said the transaction was accretive for shareholders and, combined with the December reacquisitions of New Orleans, Louisiana and Melbourne, Florida, created "significant" momentum for accelerating growth in 2021.
The transaction capped a "strong" fourth quarter for the group, which also saw two insurance company wins and an oversubscribed capital raise.
For 2020, the Seattle franchise reached around $2.7m (£1.98m) in revenue and $0.8m in profits before tax adjusted.
The purchase price was $5.5m in cash, split $5m based on 2020 performance and another $0.5m based on higher financial performance through year-end 2022, which would be subject to clawback.
Water Intelligence said it paid $4m at closing, and would pay the remainder between now and January 2023.
The board said the Seattle reacquisition created a northwest regional hub in the United States for the group.
Seattle had several "key attributes" for operating synergies, it explained, noting that firstly the Seattle team had "substantial experience" with municipal solutions.
As a result, Seattle was seen as an optimal location for the launch of the US headquarters for the group's UK-based Water Intelligence International subsidiary, which specialises in municipal offerings.
Second, it said Seattle would enable the group to tie together its growing corporate operation in Portland to the south, and a new greenfield location to be set up in Vancouver, Canada to the north.
Finally, Seattle was described as an important centre for 'green economy' technology in the US.
During the second quarter of 2020, the group reacquired its San Jose, California franchise in "the heart" of Silicon Valley, with the board adding that the Seattle location, linked to its San Jose operations, reinforced its access to new technologies that were relevant for leadership in the green economy.
The leadership team in Seattle would be staying to help grow the northwest US operations.
In addition, one member of the leadership team would be moving to San Jose, to grow that corporate operation and to link the technology operating plan between San Jose and Seattle.
"We are delighted to start 2021 with the reacquisition of Seattle," said executive chairman Dr Patrick DeSouza.
"It is a cornerstone location for our growth plan and will reinforce our technology leadership for the green economy."
Dr DeSouza said that the company had added to its "already-strong" management team with a team that had built a multi-million dollar location themselves.
"We had a remarkable 2020 despite the challenges of Covid and, importantly, we have positioned ourselves with significant momentum for a very strong 2021."
At 1003 GMT, shares in Water Intelligence were up 2.39% at 514p.
The AIM-traded firm said it was the largest franchise reacquisition to date, describing it as a strategic move in tying together different growing business segments and creating efficiencies.
It said the transaction was accretive for shareholders and, combined with the December reacquisitions of New Orleans, Louisiana and Melbourne, Florida, created "significant" momentum for accelerating growth in 2021.
The transaction capped a "strong" fourth quarter for the group, which also saw two insurance company wins and an oversubscribed capital raise.
For 2020, the Seattle franchise reached around $2.7m (£1.98m) in revenue and $0.8m in profits before tax adjusted.
The purchase price was $5.5m in cash, split $5m based on 2020 performance and another $0.5m based on higher financial performance through year-end 2022, which would be subject to clawback.
Water Intelligence said it paid $4m at closing, and would pay the remainder between now and January 2023.
The board said the Seattle reacquisition created a northwest regional hub in the United States for the group.
Seattle had several "key attributes" for operating synergies, it explained, noting that firstly the Seattle team had "substantial experience" with municipal solutions.
As a result, Seattle was seen as an optimal location for the launch of the US headquarters for the group's UK-based Water Intelligence International subsidiary, which specialises in municipal offerings.
Second, it said Seattle would enable the group to tie together its growing corporate operation in Portland to the south, and a new greenfield location to be set up in Vancouver, Canada to the north.
Finally, Seattle was described as an important centre for 'green economy' technology in the US.
During the second quarter of 2020, the group reacquired its San Jose, California franchise in "the heart" of Silicon Valley, with the board adding that the Seattle location, linked to its San Jose operations, reinforced its access to new technologies that were relevant for leadership in the green economy.
The leadership team in Seattle would be staying to help grow the northwest US operations.
In addition, one member of the leadership team would be moving to San Jose, to grow that corporate operation and to link the technology operating plan between San Jose and Seattle.
"We are delighted to start 2021 with the reacquisition of Seattle," said executive chairman Dr Patrick DeSouza.
"It is a cornerstone location for our growth plan and will reinforce our technology leadership for the green economy."
Dr DeSouza said that the company had added to its "already-strong" management team with a team that had built a multi-million dollar location themselves.
"We had a remarkable 2020 despite the challenges of Covid and, importantly, we have positioned ourselves with significant momentum for a very strong 2021."
At 1003 GMT, shares in Water Intelligence were up 2.39% at 514p.