Advanced Reading for the 2012 BlueTech Forum: Patent Landscape Analysis of M&A Activity in the Water Sector

The BlueTech Forum in San Francisco next week will highlight innovative water technologies and serve as a networking platform for investors, CEOs, and policymakers in the water sector.

One of the features of the Forum will be a panel on M&A activity in the water sector. This is bound to be a topic of interest, given these three recent and major water deals:

  1. Pentair’s acquisition of Norit CPT for an estimated $700M, and subsequent merger with Tyco Flow.
  2. Ecolab’s acquisition of Nalco for $1.6Bn
  3. Xylem’s spinoff from ITT Water & Wastewater group, and subsequent acquisition of Yellow Springs Instruments

The following patent landscape maps are an exercise to determine the justifications for each of these particular mergers and acquisitions. The patent landscapes below provide a snapshot of each companies’ technological competencies, product development strategies, and patent holdings. From these overall trends, we can develop inferences as to where Pentair, Ecolab, or Xylem expect to increase market power or diversify product holdings through their M&A activities. For Xylem, in particular, we will also take a look at potential targets for future acquisitions.

Pentair/Norit/Tyco Flow

Pentair (green), Norit (red), and Tyco Flow’s (yellow) patent portfolios are on the map below. Almost immediately, we can see how these three companies’ technological strengths complement each other.

Patent landscape map of all patent publications by Pentair, Norit CPT, and Tyco Flow. Map powered by Thomson Reuters Aureka software.

Patent landscape map of all patent publications by Pentair, Norit CPT, and Tyco Flow. Map powered by Thomson Reuters Aureka software.

Pentair (green) has strong patent holdings in activated carbon water filtration, water pump technology, pool lighting, and flow control monitoring. Norit CPT (red) is a valuable acquisition, as its extensive technological holdings in activated carbon filtration strengthens Pentair’s portfolio – creating a patent fortress around a key filtration technology (pink circle). Norit’s expertise in monitoring the fouling status of water (blue circle) adds to Pentair’s strengths, allowing the company to determine when a water filtration system needs to be implemented/replaced.

Tyco Flow (yellow), on the other hand, has extensive patent holdings in automated valve technology (orange arrows). Tyco Flow’s ability to use valves to control the flow of water, especially in emergency situations, is a strategic asset to Pentair’s water pump and flow control technology.

Nalco/ Ecolab

The relationship between Nalco (yellow) and Ecolab (green), two water chemistry giants, is showcased in the map below.

Patent Landscape map of all patent publications by Nalco and Ecolab.

Patent Landscape map of all patent publications by Nalco and Ecolab. Map powered by Thomson Reuters Aureka software

As we can see, Nalco (yellow) and Ecolab (green) have extensive patent holdings, at 3223 and 3701 patent documents respectively. Despite the size of these companies’ portfolios, Nalco and Ecolab’s technical competencies do not overlap much. Nalco’s patents are focused on wastewater systems and processes, with an emphasis on water chemistry monitoring systems, corrosion inhibition, paint effluent, and papermaking. Ecolab’s patents, on the other hand, focus on specific water cleaning products such as detergents, other cleaning agents, and disinfectants. The merger between Nalco and Ecolab appears to vertically integrate the water treatment supply chain from wastewater and other effluent management to subsequent reuse for drinking water and food.

Xylem (ITT Water & Wastewater)/YSI, Inc.

Xylem’s acquisition of YSI, Inc., in contrast, is a pure technology play. The acquisition is at a much smaller scale than Nalco/ Ecolab or even Pentair/Norit.

Patent landscape map of all patent publications by Xylem (Including ITT Water & Wastewater) and YSI, Inc. Map powered by Thomson Reuters Aureka software.

Patent landscape map of all patent publications by Xylem (Including ITT Water & Wastewater), YSI, Inc, plus backward and forward citations of Xylem and YSI's patent documents. Map powered by Thomson Reuters Aureka software.

When we include all patent documents assigned to ITT Water, Xylem (red) has only 17 patent documents in the space. Through the acquisition of YSI, Inc. (green), Xylem gains access to the company’s core IP holdings – 98 patent documents that represent YSI’s 60 years of technical expertise in water quality monitoring.

If we extend the Xylem/YSI patent landscape map (below) to include similar patent documents by other companies, we can guess at future acquisition targets for Xylem:

  • Microfabricated pumps and valves (orange circle): The California Institute of Technology (yellow) has a strong presence. Though an academic institution, Xylem should be aware of any corporate spinoffs of CalTech technology for future acquisition.
  • Flow control (light blue circle, left pink circle): Emerson Process Management has a line of Rosemount Flow Products with patents (light blue) similar to Xylem and YSI holdings.
  • Flow control (left pink circle) and microfluidic analysis/control (right pink circle): Agilent Technologies, a worldwide chemical analysis and measurement company has patents (dark blue) similar to YSI, Inc.

Patent landscape map of all patent publications by Xylem (Including ITT Water & Wastewater) and YSI, and similar patents by the California Institute of Technology,  Rosemount, and Agilent. Map powered by Thomson Reuters Aureka software.

Patent landscape map of all patent publications by Xylem (Including ITT Water & Wastewater) and YSI, and similar patents by the California Institute of Technology, Rosemount, and Agilent. Map powered by Thomson Reuters Aureka software.

 

Interested in learning more? IP Checkups provides custom patent landscape analysis for your M&A, licensing, or brokerage needs. Contact us at info@ipcheckups.com.

About Lily Li

Lily Li joined IP Checkups in 2011 to co-manage the development, marketing and sales of the CleanTech PatentEdge solution. She also contributes her business and legal expertise to IP Checkups’ boutique patent analytic and research services team, helping companies align their IP strategies with their business objectives.

View all posts by Lily Li →

5 Responses to Advanced Reading for the 2012 BlueTech Forum: Patent Landscape Analysis of M&A Activity in the Water Sector

  1. Pingback: BlueTech Research Water Market Research Analyst Quoted on Forbes.com | BlueTech Research

  2. vitthal says:

    Dear Lily,
    is it possible to share the themescape presentation related to Ecolab vs Nalco analysis.
    it looks interesting.

    Best regards,
    Vitthal

    • Lily Li says:

      Dear Vitthal,

      You are welcome to click on the maps and download the large images. As long as you attach the information in the caption, and reference that the map came from “IP Checkups’ CleanTech PatentEdge Blog” – you are welcome to share the images.

      Please feel free to contact us at info@ipcheckups.com if you have more questions, or are interested in your own custom maps.

      All the best,

      Lily

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