Making good on it’s vision of consolidating the North American water management industry, Ottawa’s Clearford Water Systems (TSX-V:CLI) has acquired an Ontario-based wastewater solutions and equipment supplier.
The firm acquired Koester Canada, the Ontario-based subsidiary of a New York water treatment company, in a share-for-share transaction valued at $7.8 million.
"This is the natural progression of the company's unified water management business model,” said president and CEO Kevin Loiselle in a statement.
Clearford designs and sells sewage treatment and water purification systems. The acquisition completes its product and services offerings, Mr. Loiselle said, though the firm is not done consolidating the market. The firm intends to purchase other businesses in the near future to bolster its newly-acquired divisions.
This M&A strategy was first announced in June, as the company said it would end its reliance on contractors and bring services in-house. The company says the new business model will allow Clearford to act like a utilities operator, offering a full suite of water and wastewater solutions to municipalities and private developers.
Koester Canada was growing before the Clearford acquisition. The firm reported $3 million in annual revenues last year, and had already surpassed that figure nine months into this year with $3.4 million in revenues.
Following this acquisition, Clearford now forecasts revenues of more than $10 million in fiscal 2018.
Clearford also made an acquisition back in 2014, then purchasing Toronto’s UV Pure in a deal worth $2.5 million. That subsidiary has performed well for the firm, making up 95 per cent of Clearford’s revenues in its most recent quarter.
The firm also announced the issuing of a five-year, $2.98 million convertible debenture, which it will use to pay down short-term debt and provide additional working capital. As of Sept. 30, Cleaford held a deficit of $7.58 million.