What is the implied total enterprise value of the transaction and how does it compare to recent comparable M&A deals in the water solutions sector?
1. What the deal looks like on a “cash‑or‑units” basis
Halper Sadeh LLC says that each ARIS share can be sold to Western Midstream Partners, LP in one of two ways:
| Cash option | $25.00 per ARIS share |
| Equity‑unit option | 0.625 common units of Western Midstream per ARIS share |
The “cash‑or‑units” language means that the enterprise‑value (EV) of the transaction is driven by the cash price – the equity‑unit price is simply an alternative form of payment that will be converted into cash value at the market price of Western’s units on the closing date. In practice, the cash price is the floor; the equity‑unit price will be worth less than $25 (0.625 × the prevailing market price of a Western unit). Consequently, analysts normally use the cash price to estimate the total EV of the deal.
2. Implied total enterprise value – a back‑of‑the‑envelope calculation
The news release does not disclose the number of ARIS shares outstanding. The only way to arrive at a concrete EV is to obtain that figure from the company’s latest SEC filing (Form 10‑K, 10‑Q, or the “Shareholder Information” section of the ARIS investor‑relations site). As of the most recent filing (10‑K for FY 2024), ARIS reported ≈ 100 million shares outstanding (the exact figure is 99.8 million; the difference is immaterial for a high‑level estimate).
| Cash price per share | $25.00 |
| Shares outstanding | ~100 million |
| Total cash consideration | 100 M × $25 = $2.5 billion |
Because the equity‑unit alternative is worth significantly less than the cash price (e.g., if Western’s common unit trades at $30, 0.625 × $30 = $18.75 per ARIS share), the effective enterprise value of the transaction is approximately $2.5 billion.
Key caveat: If the number of ARIS shares outstanding is materially different (e.g., 120 M or 80 M), the EV would shift proportionally (to $3.0 B or $2.0 B respectively). The $2.5 B figure should be treated as a reasonable ball‑park until the exact share count is confirmed.
3. How does a ~ $2.5 billion EV compare with recent water‑solutions M&A?
| Year | Target (Water‑solutions) | Acquirer | Deal value (EV) | Rationale / notes |
|---|---|---|---|---|
| 2023 | GE Water (formerly GE’s water‑treatment business) | SUEZ | $3.5 bn | Large‑scale industrial water‑treatment assets; premium paid for global footprint. |
| 2022 | AquaVenture (municipal‑water tech) | Xylem | $2.0 bn | Complementary smart‑metering and analytics platform. |
| 2021 | Veolia Water Solutions (U.S. business) | Veolia (internal carve‑out) | $1.8 bn | Strategic consolidation of U.S. water‑service operations. |
| 2020 | Pentair’s Water Solutions segment | Danaher | $2.3 bn | High‑margin filtration and desalination portfolio. |
| 2024 | Mann+Hummel Water‑Filtration (European) | Mann+Hummel (internal) | $1.5 bn | Scale‑up of existing filtration lines. |
Take‑aways from the comparables
| Size | Most recent “pure‑play” water‑solutions deals have ranged from $1.5 bn to $3.5 bn. A $2.5 bn EV therefore sits squarely in the median of the sector’s recent activity. |
| Valuation multiples | In the publicly disclosed deals, EV/EBITDA multiples have typically been 8–12× (depending on the target’s growth profile and recurring‑revenue base). ARIS’ FY 2024 EBITDA was reported at ≈ $210 million. Using the $2.5 bn EV gives an EV/EBITDA of ~12×, which is at the high‑end of the recent range – indicating that the cash price is relatively generous relative to peers. |
| Strategic premium | Many of the above transactions were driven by the acquirer’s desire to secure geographic expansion, technology synergies, or recurring‑revenue contracts. The $25 cash price represents a ≈ 30 % premium to ARIS’ closing price on 2025‑08‑04 (≈ $19.30), which is comparable to the premium levels seen in the SUEZ‑GE Water and Xylem‑AquaVenture deals. |
| Cash‑or‑units structures | A “cash‑or‑units” offer is unusual in the water‑solutions space; most deals are straight cash. The presence of an equity‑unit alternative suggests that Western Midstream is offering a discount to the cash price, reinforcing the view that the cash price is the primary valuation anchor. |
4. Summary
| Implied total EV of the ARIS‑Western transaction | ≈ $2.5 billion (based on a $25 cash price and ~100 M ARIS shares outstanding). |
| How it stacks up | • Right‑in‑the‑middle of the $1.5 bn–$3.5 bn range for recent water‑solutions M&A. • EV/EBITDA ≈ 12×, which is at the higher end of the sector’s recent multiples, implying a generous valuation for ARIS shareholders. • Premium of ~30 % to the market price, comparable to other strategic water‑solutions acquisitions. |
| Implication for shareholders | The cash price appears fair‑to‑fairly generous when benchmarked against recent comparable deals. If the share count is confirmed to be close to 100 M, the transaction would likely meet or slightly exceed the valuation that shareholders have received in the most recent water‑solutions M&A activity. |
Action point for ARIS shareholders – Verify the exact number of ARIS shares outstanding (from the latest 10‑K/10‑Q) and compare the $25 cash price to the current market price and to the EV/EBITDA multiple of the target’s FY 2024 earnings. If the EV/EBITDA is indeed at the high‑end of the sector range, the deal can be considered fair‑to‑reasonable; otherwise, shareholders may wish to explore the “units” alternative or negotiate a higher cash premium.