Chart Industries, Inc. announced the acquisition of AdEdge Holdings, LLC, a water treatment technology and solution provider specializing in the design, development, fabrication and supply of water treatment solutions, specialty medias, legacy and innovative technologies that remove a wide range of contaminants from water.
The equity purchase was completed for a purchase price of $40 million in cash at closing (subject to customary adjustments) and further details are included in the supplemental presentation at the end of this release.
Chart recently announced the formation of ChartWater, a division within Specialty Products that offers an elite portfolio of proven, innovative water treatment solutions. AdEdge will join BlueInGreen (“BIG”), which Chart acquired in November 2020, in Chart’s full solution offering of water treatment and desalination technology options that couple with Chart’s water treatment equipment.
In addition to over 20 specific targeted contaminants, AdEdge provides solutions for the removal of perfluorinated alkylated substances (PFAS), perfluorooctane sulfonic acid (PFOS), and other persistent organic compounds which, historically, have been challenging to treat. These organic compounds, commonly referred to as "forever chemicals,” are known for their resistance to environmental degradation through chemical, biological, and photolytic processes, which can bioaccumulate with potential adverse impacts on human health and the environment. AdEdge brings complementary technology to BIG’s processes, as well as congruency of our brands, culture, and the common focus on sustainably-driven innovation to provide essential solutions to the world’s water challenges.
“AdEdge is a perfect fit for ChartWater,” said Chart’s CEO and President Jill Evanko. “Its technologies, solutions, and expertise strengthen Chart’s position in the growing water treatment space as we continue to invest in sustainable solutions for a wide variety of industries and applications. We intend to offer AdEdge’s solutions for PFAS and PFOS removal, in a containerized package, using our Treatment-as-a-Service (TaaS) business model.”
The growing water market represents a 2030 total addressable market (TAM) size of $5.0 billion for Chart technology and products, which doubled as the result of the AdEdge acquisition and the growing regulatory support for PFAS and PFOS removal. The U.S. Department of Defense alone is spending over $2 billion on investigation and clean-up of these contaminants in 2021, while the American Water Works Association estimates total capital investments in excess of $500 billion could be required to mitigate the health concerns over these contaminants in our U.S. drinking water supplies. AdEdge will be immediately accretive to Chart (with gross margins as a percent of sales averaging 32 to 35%), and we anticipate it will contribute approximately $35 million to $40 million of revenue and approximately $0.11 to $0.16 of adjusted non-diluted earnings per share to our 2022 outlook.
Finally, in keeping with our inorganic investment philosophy, we only acquire businesses with strong industry management teams. With the AdEdge acquisition comes a strong team of over 50 people, which will continue to be led by the founder of AdEdge, Rich Cavagnaro and supported by Rich’s partner and former owner, Greg Gilles, who brings over 30 years of treatment technology, industrial, regulatory and engineering experience.
“AdEdge is excited to be part of the growing ChartWater platform. The additional options to provide solutions to our existing and new customers will be appealing and the professional growth opportunities for our team is something I’m thrilled to see unfold,” stated Rich Cavagnaro.
Winston & Strawn LLP served as sole legal advisor to Chart on the transaction. Raymond James acted as financial advisor to AdEdge on the transaction, and Morris, Manning & Martin, LLP as legal counsel.