CHART OF THE MONTH - Recent merger and acquisition activity in the water sector

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This month’s chart shows M&A activity in the water sector. It reveals that 2012 was not a good year for water deals.

The biggest transaction was Pentair’s $5.3 million acquisition of Tyco Flow. This compares to the biggest deal of 2011, which was the $8.3 billion acquisition of Nalco by Ecolab. Looking forward to 2013, the most interesting deal is likely to be the acquisition of Siemens Water Technologies. This is likely to bring a new entrant into the market and provide a signal to other investors as to whether water technology is a good investment. The biggest deal would be a Suez Environnement – Veolia Environnement merger. If such a deal were to go ahead, it would cast a long shadow over water valuations, as it would imply that from the point of view of the market leaders, water was a consolidation play, not a growth play.