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LiqTech Announces Agreement To Acquire Operations Of Provital Solutions

BALLERUP, Denmark, July 16, 2014 /PRNewswire/ -- LiqTech International, Inc. (NYSE MKT: LIQT) ("LiqTech") announces today that it has signed a definitive agreement to acquire the operations of Provital Solutions A/S ("Provital Solutions" or "Provital"), a Denmark-based water solutions company specialising in integrated filtration solutions for the swimming pool and spa market segments.

LiqTech expects to leverage Provital's systems application capabilities to allow LiqTech's customers to accelerate the testing and validation cycle of LiqTech's SiC solutions, while LiqTech's worldwide sales presence will expand Provital's sales opportunities. 

In 2013, Provital Solutions sales were US$2.5 million with EBITDA margins in excess of 25%.  The transaction is expected to be accretive to EPS in 2014.

Provital Solutions was founded in 2009 to sell filtration solutions based exclusively on LiqTech's ceramic membranes for the pool and spa industry. Provital Solutions has successfully identified the benefits of SiC liquid membranes for users, operators and the environment: improved water quality, and reduced water and energy consumption.

Provital Solutions has established a sales network covering strategic regions including Scandinavia, North America and Australia. Besides designing and supplying large SiC liquid membrane systems for pools and aquaculture operators, Provital Solutions has also developed a UV hybrid disinfection technology that complements the current product portfolio and opens new market development opportunities.

The definitive agreement provides that LiqTech will acquire 100% of Provital Solutions for certain LiqTech shares with an equivalent value of DKK 33.6 million ( US$6.1 million) (based on LiqTech's closing price on July 14, 2014) and a cash amount equalling DKK12.6 million ( US$2.3 million). One-third of the shares have a lock-up period of six months; the balance of the shares will be placed in escrow, with release contingent on Provital achieving sales for 2014 and 2015 of US$12 million and US$22 million, respectively, with accompanying earnings before interest and taxes targets, and with a catch up provision in the earnout for 2016 if similar revenue levels are reached in the  aggregate over the two-year period. As part of the agreement, LiqTech is obligated to support Provital Solutions with working capital to support its growth and launch of market-ready new products. The transaction will be subject to customary closing conditions and is expected to be completed in July 2014.

The technical engineering and applications expertise of Provital will augment LiqTech's SiC membrane specialists that provide technical recommendations and applications guidance in the use of LiqTech's SiC liquid membrane products. This technical support capability is in high demand and the scope of customer requests has shifted towards more comprehensive engineering support. LiqTech expects that the acquisition of Provital Solutions, with its engineering know-how, will expand LiqTech's in-house capabilities and enable our customers to accelerate the sales of their turnkey SiC liquid membrane filtration solutions at reduced development costs.

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