SPX Technologies (SPXC) Buys FIS Water for $410M. Can Water Management Lift Cooling Returns?

SPX Technologies (SPXC) recently completed the acquisition of FIS Water, LLC for roughly $410 million in cash, which includes certain tax attributes. The target business is projected to generate about $105 million in revenue for the year 2026, representing its full-year revenue forecast. The cash consideration equates to approximately 3.9 times expected annual revenue, emphasizing the importance of profitability and cash conversion for the investment.

FIS Water's filtration and flow-control products are designed to remove solids, maintain water quality, and regulate water movement within commercial and industrial cooling systems, including data centers. This acquisition expands SPX Technologies' product offerings, as the business's filtration and flow-control products complement their existing cooling-tower offerings.

Additionally, its valves and actuators align with the recently acquired Neptronic controls business. The strategic motivation behind the acquisition lies in customer overlap, shared engineering specifications, and sales channels. The company intends to leverage its global distribution and relationships with equipment manufacturers to drive growth.

By cross-selling more products to each cooling project and utilizing existing sales relationships, SPX Technologies aims to increase revenue per customer and enhance the overall value of the acquired business within the group. Although the acquisition announcement did not disclose specific target profitability or quantified synergies, the $105 million revenue base provides a measure of scale.

However, it does not reveal the extent of operating profit or cash generation that the business can achieve with the $410 million investment.