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Acquisitions and Divestitures | 9 Months Ended
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Sep. 30, 2025
Business Combination [Abstract] |
Acquisitions and Divestitures | Acquisitions and Divestitures 2025 Asset Acquisition Vacom Systems, LLC At the beginning of the second quarter, 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 has a total cash consideration of $42 million, of which $37 million was paid at closing. The remaining cash consideration will be paid over the next 12 to 18 months, subject to working capital and other customary adjustments. 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 is $49 million. The developed technology has a useful life of 15 years and will be amortized over its useful life on a straight-line basis within the Water Solutions and Services segment. 2025 Business Combination Simply Clean Air and Water, Inc. On January 31, 2025, we acquired 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 consolidated financial statements include Simply Clean's results of operations within the Water Solutions and Services segment. EMX Holdings, Inc. On July 23, 2025, we acquired 100% ownership interest in EMX Holdings, Inc. and its subsidiary ("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 total fair value of consideration transferred was $106 million, which was paid in cash on closing date, subject to final closing working capital and other ordinary adjustments. 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 following table summarizes the preliminary acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from EnviroMix:
(in millions) | Fair Value |
Receivables | 4 |  |
Contract assets | 8 |  |
Goodwill | 76 |  |
Other intangible assets, net | 34 |  |
Other non-current assets | 1 |  |
Accounts payable | (3) |  |
Accrued and other current liabilities | (4) |  |
Deferred income tax liabilities | (9) |  |
Other non-current accrued liabilities | (1) |  |
Total | $ | 106 |  |
The preliminary purchase price allocation is subject to further refinement and may require significant adjustments to arrive at the final purchase price allocation. The above fair values of assets acquired and liabilities assumed are preliminary. The fair values of the intangible assets acquired were preliminarily determined using the income and cost approaches. In many cases, the determination of the fair values required estimates about discount rates, future expected cash flows, and other future events that are judgmental and subject to change. 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. The $76 million of goodwill recognized, which is not deductible for U.S. income tax purposes, is primarily attributable to management know-how and costs and revenue synergies expected from combining the operations of EnviroMix with Xylem. Identifiable Intangible Assets Acquired The following table summarizes key information underlying identifiable intangible assets related to the EnviroMix acquisition:
| Useful Life(a) | Fair Value (in millions)
Customer Relationships | 10 years | $ | 25 |
Backlog | 8 months | 5 |
Non-compete agreements | 5 years | 3 |
Trade Name | 6 years | 1 |
Total | 8.1 years | $ | 34 |
(a) Useful life approximates weighted average useful life. The preliminary estimates of fair value of EnviroMix’s identifiable intangible assets were determined using the income approach. The fair value measurements were primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement of the fair value hierarchy as defined in ASC 820, Fair Value Measurements. Intangible assets consisting of the customer relationships, backlog, trade name, and non-compete agreements were valued using the multi-period excess earnings method (“MEEM”), the relief from royalty (“RFR”) method, or the with and without method, all of which are forms of the income approach. •The customer and backlog intangible assets were valued using the MEEM. The MEEM is an approach where the net earnings attributable to the asset being measured are isolated from other “contributory assets” over the intangible asset’s remaining economic life. •The trade name intangible asset was valued using the RFR method. The RFR method suggests that in lieu of ownership, the acquirer can obtain comparable rights to use the subject asset via a license from a hypothetical third-party owner. The asset’s fair value is the present value of license fees avoided by owning it (i.e., the royalty savings). •The non-compete agreement was valued using the with and without method. The with and without method of valuation is an approach that considers the hypothetical impact to the projected cash flows of the business if the intangible asset was not in place. Pro Forma Financial Information Pro forma results of operations have not been included, as the acquisition of EnviroMix was not material to our results of operations for any periods presented. 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 an additional loss of $8 million, reflecting the impact of the final working capital adjustment. The loss is presented on the Condensed Consolidated Income Statement within "Loss on sale of businesses" in the in the nine months ended September 30, 2025. 2025 Assets Held For Sale During the quarter ended September 30, 2025, the Company committed to a plan to sell the international metering business, a part of the Measurement and Control Solutions segment, within one year. The international metering business offers a portfolio of water and heat meters for residential, commercial, and industrial applications. As a result, assets and liabilities of the business were reclassified as held for sale as of September 30, 2025, and loss on assets held for sale of $39 million was recorded during the nine months ended September 30, 2025, because the carrying value of the international metering business is greater than its estimated fair value less cost to sell. The loss is presented within "Loss on sale of businesses" on our Consolidated Income Statements. 2024 Business Combination Global Omnium Idrica, S.L. On April 26, 2023, we acquired a 25.1% equity interest in Global Omnium Idrica S.L. (“Idrica”), a global company specializing in digital transformation for the water industry, offering innovative services and technological solutions for comprehensive water cycle management for $51 million. In connection with the transaction, the Company was granted the right to purchase a majority interest in Idrica from the joint venture partner at a fixed price. The investment was accounted for as an equity method investment as the Company had significant influence but did not have control over Idrica. On December 10, 2024, we acquired an additional 35.9% equity interest in Idrica for $154 million ($150 million, net of cash received) by exercising our call right and now hold an aggregate ownership interest in Idrica of 61.0%. This was accounted for as a step acquisition where the Company has applied the acquisition method of accounting in accordance with ASC 805, Business Combinations. The fair value of our call right was included within the fair value of previously held equity interest and recognized as part of the consideration transferred and the gain on remeasurement of our call right was also included in the gain on remeasurement of previously held equity interest (as discussed below). The Company recognized assets acquired and liabilities assumed at their fair value as of the date of acquisition, with the excess purchase consideration recorded to goodwill. As the Company finalizes the estimation of the fair value of the assets acquired and liabilities assumed, additional adjustments may be recorded during the measurement period (a period not to exceed 12 months from the acquisition date). The total fair value of consideration transferred was $637 million, which includes cash paid to Idrica, the remeasurement to fair value of our previously held equity interest, the fair value of the redeemable non-controlling interest, and the settlement of a preexisting contractual relationship between the Company and Idrica. This relationship related to a distribution agreement that the Company had previously recognized in other non-current assets. The acquisition-date fair value of the consideration consisted of the following:
(in millions) | Fair Value of Purchase Consideration
Cash paid | $ | 154 |
Fair value of previously held equity interest | 193 |
Fair value of redeemable non-controlling interest | 237 |
Settlement of preexisting relationship | 53 |
Total | $ | 637 |
The Company remeasured its previously held 25.1% equity interest in Idrica immediately prior to the completion of the acquisition to its estimated fair value of approximately $193 million. This fair value was derived by using the discounted cash flow method of the income approach, which considers future cash flows that are discounted to present value at a rate of return commensurate with the business and financial risks associated with the expected achievement of the projected cash flows. As a result of the remeasurement of its previously held equity interest, the Company recognized a gain of approximately $152 million in the fourth quarter of 2024. The gain reflects the excess of the estimated fair value of $193 million for the Company’s previously held 25.1% equity interest over its carrying value of approximately $41 million. The following table summarizes the preliminary acquisition date fair value of net tangible and intangible assets acquired, net of liabilities assumed from Idrica:
(in millions) | Fair Value |
Cash and cash equivalents | $ | 4 |  |
Receivables | 5 |  |
Prepaid and other current assets | 6 |  |
Goodwill | 522 |  |
Other intangible assets, net | 165 |  |
Other non-current assets | 15 |  |
Accounts payable | (8) |  |
Accrued and other current liabilities | (5) |  |
Short term borrowings and current maturities of long-term debt | (16) |  |
Long term debt | (7) |  |
Deferred income tax liabilities | (41) |  |
Other non-current accrued liabilities | (3) |  |
Total | $ | 637 |  |
The preliminary purchase price allocation is subject to further refinement and may require significant adjustments to arrive at the final purchase price allocation. The above fair values of assets acquired and liabilities assumed are preliminary. The fair values of the intangible assets acquired were preliminarily determined using the income and cost approaches. In many cases, the determination of the fair values required estimates about discount rates, future expected cash flows, and other future events that are judgmental and subject to change. 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. Our revenue and net loss attributable to the Idrica acquisition for the year ended December 31, 2024 and nine months ended September 30, 2025 were not material. The $522 million of goodwill recognized, which is not deductible for U.S. income tax purposes, is primarily attributable to costs and revenue synergies and economies of scale expected from combining the operations of Idrica with Xylem. Identifiable Intangible Assets Acquired The following table summarizes key information underlying identifiable intangible assets related to the Idrica acquisition:
(in millions) | Useful Life (in years)(a) | Fair Value (in millions)
Customer Relationships | 24 | $ | 28 |
Backlog | 9 | 2 |
Technology | 7 | 132 |
Trade Name | 10 | 2 |
Intangible Assets Under Construction | N/A | 1 |
Total | 10 | $ | 165 |
(a)Useful life approximates weighted average useful life. •The preliminary estimates of fair value of Idrica’s identifiable intangible assets were determined using a combination of the income and cost approaches. The fair value measurements were primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement of the fair value hierarchy as defined in ASC 820, Fair Value Measurements. Intangible assets consisting of the customer relationships, backlog, and trade name were valued using the multi-period excess earnings method (“MEEM”) or the relief from royalty (“RFR”) method, both of which are forms of the income approach. The intangible asset related to Idrica’s developed technology was valued using the replacement cost approach. •The customer and backlog intangible assets were valued using the MEEM. The MEEM is an approach where the net earnings attributable to the asset being measured are isolated from other “contributory assets” over the intangible asset’s remaining economic life. •The trade name intangible asset was valued using the RFR method. The RFR method suggests that in lieu of ownership, the acquirer can obtain comparable rights to use the subject asset via a license from a hypothetical third-party owner. The asset’s fair value is the present value of license fees avoided by owning it (i.e., the royalty savings). •The developed technology intangible asset was valued using the replacement cost approach. The replacement cost approach is a valuation method that relies on estimating the replacement costs of assets based on the principle that an asset would not be purchased for a price higher than the cost to replace it with an asset of comparable utility. Pro forma results of operations have not been included, as the acquisition of Idrica was not material to our results of operations for any periods presented. Heusser On December 5, 2024, we acquired all issued and outstanding shares of Heusser Water Solutions AG ("Heusser"), a leading distributor and provider of advanced pumping systems and treatment solutions in Switzerland, for $40 million ($35 million, net of cash received). Heusser, a privately-owned company headquartered in Cham, Switzerland, has approximately 90 employees. Our consolidated financial statements include Heusser's results of operations prospectively from December 5, 2024 primarily within the Water Infrastructure segment.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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