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:
- Pentair’s acquisition of Norit CPT for an estimated $700M, and subsequent merger with Tyco Flow.
- Ecolab’s acquisition of Nalco for $1.6Bn
- 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 (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.
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.
The relationship between Nalco (yellow) and Ecolab (green), two water chemistry giants, is showcased in the map below.
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.
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.
Interested in learning more? IP Checkups provides custom patent landscape analysis for your M&A, licensing, or brokerage needs. Contact us at firstname.lastname@example.org.