The 3M Co., reported that it would acquire filtration products maker Cuno Inc. for about $1.35 billion in a move to capitalize on the growing need for water purification globally.
Water purification is being targeted as a high-growth market by other companies, including General Electric Co. Global liquid and air filtration is a more than $30-billion market and is growing more than 8% a year, 3M said.
"The size of the opportunity here is huge," said 3M chairman and chief executive W. James McNerney.
3M plans to pay $72 a share in cash for Cuno, a 31% premium from its closing price Wednesday, and assume $60 million of debt. 3M had $1.8 billion in cash and equivalents at the end of March.
Analysts said filtration, especially for water, was a hot growth area.
"The smart money out there is saying this is a growth business and they're going after it," Morningstar analyst Scott Burns said. "You can't make good steel with water that has a lot of crud in it or cool nuclear power plants with water with contaminants.
"Water is a key raw material for a lot of these processes and something we take for granted in the Western world."
Cuno shares rose $16.03, or 29.2%, to $70.85 on Nasdaq. 3M shares fell $1.21 to $75.78 on the New York Stock Exchange.