Veralto Signs Agreement to Acquire Cleanwater1
Rhea-AI Summary
Veralto (NYSE: VLTO) signed a definitive agreement to acquire Cleanwater1 for $465 million, with an estimated net purchase price of $452 million after tax benefits. Closing is targeted for the fourth quarter of 2026, subject to customary conditions.
Cleanwater1 provides on-site hypochlorite disinfection, solids management and odor filtration technologies, with an installed base of about 25,000 units across municipal, wastewater and industrial markets. It generated roughly $135 million in last‑twelve‑month sales as of June 30, 2026, about 25% from aftermarket. The price implies roughly 17x LTM adjusted EBITDA. Cleanwater1’s sales have grown at a low double-digit CAGR since 2023, and Veralto expects similar growth over the next few years.
The deal is expected to be neutral to modestly accretive to Veralto’s adjusted EPS in 2027 and to reach a return on invested capital at or above the company’s weighted average cost of capital by year four.
Positive
- $452 million net purchase price at ~17x LTM adjusted EBITDA
- Adds roughly $135 million in LTM sales with low double-digit CAGR since 2023
- Aftermarket revenue about 25% of sales, supporting recurring revenue
- Installed base of ~25,000 units expands Water Quality footprint
- Expected neutral to modestly accretive to adjusted EPS in 2027
- Target ROIC at or above WACC by year four
Negative
- Valuation of ~17x LTM adjusted EBITDA implies a relatively high multiple
- EPS accretion only expected to be neutral to modest in 2027
- ROIC only expected to meet or exceed WACC by year four, delaying value realization
AI-generated analysis. How Rhea-AI works. Not financial advice.
Strengthens Veralto's leadership in water disinfection and contaminant removal
Expands presence in high-growth chlorine disinfection and solid management applications
Provides installed base of ~25,000 units to drive recurring revenue
Cleanwater1 is a leading provider of on-site hypochlorite disinfection, solids management and odor filtration technologies with an installed base of approximately 25,000 units across municipal drinking water, wastewater and industrial applications. As a trusted industry leader with deep application expertise, Cleanwater1's technologies are essential to customers' daily water treatment operations, helping customers enhance operational efficiency, safety and regulatory compliance.
Cleanwater1's technologies are complementary to Veralto's existing water treatment portfolio and will expand Veralto into adjacent, high-growth water treatment applications. With clearly identified commercial synergies between Cleanwater1 and Trojan Technologies ultraviolet water treatment solutions, Veralto expects to accelerate Cleanwater1's growth rate by leveraging Trojan's existing customer relationships, applying the Veralto Enterprise System (VES) and increasing Cleanwater1's recurring revenue over time.
"Cleanwater1's differentiated water treatment technologies, deep application expertise and large installed base will further bolster our Water Quality segment. This acquisition will expand our presence in attractive, faster-growing water treatment applications while creating meaningful opportunities to drive recurring revenue growth and deeper customer engagement. We see a clear path to leverage our combined capabilities to deliver enhanced value to our customers and drive long-term shareholder value. We look forward to welcoming the Cleanwater1 team to Veralto," said Jennifer L. Honeycutt, President and Chief Executive Officer, Veralto.
"Joining Veralto opens incredible opportunities for Cleanwater1 to continue and further enhance our growth trajectory, while driving increased ability to meet growing demand from customers. With shared values and a common purpose, I believe the future for our company as a Veralto business is bright," said David Stanton, Chief Executive Officer, Cleanwater1.
Financial Overview
The net purchase price, after considering estimated tax benefits, of
The acquisition is expected to be neutral to modestly accretive to Veralto's adjusted earnings per share in 2027 and generate a return on invested capital at or above the Company's weighted average cost of capital by year four.
(1) Based on a purchase price of
About Veralto
With annual sales of approximately
About Cleanwater1
Cleanwater1, Inc. is a leading provider of innovative water quality and odor control technologies, solutions and services across municipal and industrial water and wastewater markets. Cleanwater1 and its related entities pair using proven technologies and brands like Polyblend®, Dynablend™, Veloblend™, PAX Mixers, Monoclor® RCS, Microclor® OSHG and I-Box® Odor Control Systems, with cutting edge strategies and innovations to help customers meet and exceed water quality goals and regulations.
Use of Non-GAAP Financial Information
Veralto supplements its consolidated financial statements presented on a GAAP basis with certain non-GAAP financial information, to provide investors with greater insight, increase transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making. References to the non-GAAP financial measure of return on invested capital refers to the gross purchase price of the acquisition divided by the net operating profit after taxes of the acquired business. References to non-GAAP adjusted EBITDA refer to operating profit before interest, taxes, depreciation and amortization expenses, adjusted for unusual, infrequent, or non-recurring items that are not considered part of core ongoing operations by management. References to non-GAAP adjusted EPS refer to earnings adjusted for unusual, infrequent, or non-recurring items that are not considered part of core ongoing operations by management per common share. The non-GAAP financial measures disclosed by Veralto in this press release should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP, and the financial results prepared in accordance with GAAP and reconciliations from these results should be carefully evaluated.
Cleanwater1 Financial Information
The financial information of Cleanwater1 provided herein is unaudited and is derived from information provided to Veralto by Cleanwater1's management in conjunction with due diligence procedures, with various Veralto management adjustments also reflected. This information has not been conformed to the accounting principles (GAAP) and accounting policies followed by Veralto. Further, the definitions of performance measures of the Cleanwater1 business, such as sales, gross margin and operating profit, may not align with the definitions used by Veralto.
Forward Looking Statements
Certain statements in this release, including the statements regarding the proposed acquisition of Cleanwater1 and the anticipated timing thereof, the anticipated impact of the transaction on the Company, Cleanwater1's future financial performance, the Company's differentiation and positioning to continue delivering sustainable, long-term shareholder value and any other statements regarding events or developments that we believe or anticipate will or may occur in the future are "forward-looking" statements within the meaning of the federal securities laws. All statements other than historical factual information are forward-looking statements, including, without limitation, statements regarding: projections of revenue, expenses, profit, profit margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, Veralto's liquidity position or other financial measures; Veralto's management's plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions and the integration thereof, divestitures, spin-offs, split-offs or other distributions, strategic opportunities, securities offerings, stock repurchases, dividends and executive compensation; growth, declines and other trends in markets Veralto sells into, including the impact of changes to global trade policies, restrictions on imports, related countermeasures and reciprocal tariffs; future new or modified laws, regulations and accounting pronouncements or public policy changes; future regulatory approvals and the timing thereof; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; future foreign currency exchange rates and fluctuations in those rates; general economic and capital markets conditions; the anticipated timing of any of the foregoing; assumptions underlying any of the foregoing; and any other statements that address events or developments that Veralto intends or believes will or may occur in the future. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings. These forward-looking statements speak only as of the date of this release and except to the extent required by applicable law, the Company does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.
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SOURCE Veralto