Consolidated Water Co. Ltd, a leading developer and operator of advanced water supply and treatment plants, has purchased a controlling interest in PERC Water Corporation (PERC) for approximately $4.1 million.
PERC is an innovative water infrastructure company headquartered in Costa Mesa, California that develops, designs, builds, operates and manages water and wastewater infrastructure throughout the Western U.S. The company's proven business model provides customers certainty in cost, scheduling and performance through a wide range of project delivery methods and asset management services.
Since its inception in 1998, PERC has completed and continues to support numerous water infrastructure projects, including new facilities, facility upgrades, short and long-term operations services, and asset management engagements, and brings to Consolidated Water several active projects.
PERC's market reach extends throughout the U.S. with a strong focus and presence in the Southwestern U.S., where water shortages are becoming increasingly prevalent. The PERC acquisition expands Consolidated Water's product and service offerings to include advanced water and wastewater recycling plants. PERC has won numerous industry awards for its innovative designs and highly efficient project delivery model.
"This acquisition represents another milestone in our strategy to widen our geographical footprint, expand into new markets, and complement our revenue stream with synergistic product and service offerings," commented Consolidated Water CEO, Rick McTaggart. "PERC also provides a platform to expand our core business of designing, constructing and operating desalination plants into water short regions of the U.S., particularly in the Southwest."
PERC Founder Johan Perslow commented: "Given our many synergies and shared vision for growth, we're excited to become a part of the Consolidated Water team. The Southwest's water management challenges have created growing demand and opportunity for water treatment and reuse projects. Given Consolidated Water's specialized capabilities, greater access to capital and other important resources they provide, PERC is well-positioned to take greater advantage of this fast-growing market."
Transaction Terms
Effective October 24, 2019, Consolidated Water purchased 51% of the outstanding stock in PERC Water Corporation from existing shareholders for approximately $4.1 million. This purchase price may be adjusted based upon the final determination of actual working capital amounts at closing, but any such adjustment is not expected to be material. PERC generated approximately $8.7 million and $11.8 million in revenues over the nine months ended June 30, 2019 and the twelve months ended September 30, 2018, respectively.
As a result of the transaction, a small group including PERC senior executives now collectively own 49% of PERC. Consolidated Water has been granted a call option, exercisable after three years, to purchase the remaining 49% of PERC at market value. The minority shareholders in PERC each have individual put options, exercisable after five years, to compel Consolidated Water to buy a portion or all of their remaining 49% ownership at market value.
