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Xylem Chief Sees More Acquisitions in Water Company’s Future

Xylem Inc. (XYL), the water company whose pumps helped clean New York tunnels and homes flooded by Hurricane Sandy, sees more acquisitions in its future.

“Bolt-on” purchases that complement the core business of the company spun off last year from ITT Corp. (ITT) make sense and Xylem has the funds to do them, Chief Executive Officer Gretchen McClain said in an interview in Chicago.

The company, which has made $1.36 billion of acquisitions since 2010 including $584 million paid for dewatering-pump supplier Godwin, has targeted at least $300 million of purchases for 2013, she said. Xylem’s range of products and technologies transport, treat and test water and wastewater.

“Our current strategy of bolt-on acquisitions is working for us,” McClain said on the sidelines of a two-day water conference that wrapped up yesterday. Xylem spent $41 million for the Danish analytical instrumentation firm MJK Automation A/S and dewatering company Heartland Pumps of Carterville, Illinois, this year and $310 million in 2011 for sensor developer YSI Inc.

The White Plains, New York-based company, whose sensor products and treatment solutions can help clients cut operating costs, this week published a nationwide survey on the value of water, following up on a similar survey two years earlier, that showed increasing concern in the U.S. about water issues.

Almost nine of 10 surveyed believe water infrastructure needs reforming in the U.S., from pipes to network modernization, up from 80 percent two years earlier.

Water ‘Disconnect’

The survey showed Americans are more willing to pay for upgrades to the water system, even with recent rate increases, to help bring about additional infrastructure improvements.

More than half of the 1,008 Americans surveyed from Aug. 16 to Aug. 23 believe they use 50 gallons (189 liters) or less of water daily when it’s closer to double that, Xylem’s study showed.

“It’s easy for us to take clean water for granted because its considerable underlying costs are mostly invisible to us,” McClain said in the study. The Environmental Protection Agency estimates $1 trillion “will be needed to pay for water and wastewater infrastructure improvements over the next 20 years.”

In a time of water scarcity and budget constraints, “we are losing more than 1.7 trillion gallons of water annually as a result of breaks and leaks in our aging water infrastructure,” she wrote, advocating an end to such a “disconnect.”

To contact the reporter on this story: Randall Hackley in London at rhackley@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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