Hilliard, Ohio-based Advanced Drainage Systems Inc. has purchased one of its strategic partners, Infiltrator Water Technologies LLC, in a $1.08 billion deal with the Ontario Teachers' Pension Plan.
The acquisition lets plastic pipe maker ADS, which is focused on managing stormwater for commercial, residential, infrastructure and agricultural applications, expand into the related area of septic wastewater treatment with a long-time customer.
Old Saybrook, Conn.-based Infiltrator has used ADS products for more than 15 years. The company posted sales of $275 million in 2018 — up 9 percent from 2016 — for its plastic leach field chambers and septic tanks for mostly residential use.
Infiltrator CEO Roy Moore and key managers will stay with the company and operate as a business unit within ADS.
With annual sales of $1.4 billion, ADS ranks third among pipe, profile and tubing extruders in North America, according to Plastics News' latest ranking.
The combined companies are expected to reach sales of $1.6 billion in fiscal year 2020 from manufacturing operations at 63 plants — 56 ADS and seven Infiltrator — that employ a total of 4,879 people, with 479 coming from Infiltrator.
Both businesses are gaining market share as more customers turn to plastic systems for storm water and septic solutions over traditional materials like concrete. Plastic chambers and tanks made of high density polyethylene and polypropylene now account for about 50 percent of the $1.2 billion septic leach field and tank business.
The combination of Infiltrator and ADS is expected to create synergies of $20 million to $25 million by the third year through manufacturing, recycling, logistics and significant cross-selling opportunities, ADS President and CEO Scott Barbour said in a conference call Thursday about ADS's quarterly results and the acquisition.