BluMetric Environmental Inc. announced its acquisition of U.S.-based Gemini Water, LLC (“Gemini Water”), marking the Company’s cleantech water portfolio expansion and entry into the Caribbean and U.S. water markets (the “Acquisition”).
Under the terms of the membership interest purchase agreement executed September 23, 2024, BluMetric acquired 100% of the membership interest in Gemini Water from GSWS Holdco Inc. (the “Vendor”) in exchange for a purchase price of US$5.05 million (the “Purchase Price”). At closing, the Company paid out from its working capital and operating line, an initial amount of US$3.0 million (CA$4.1 million) and issued 2,352,500 Common Shares in the Capital of the Company to the Vendor (the “Closing Equity Consideration”). The remaining balance of US$1.05 million will be paid through an earn-out over the next three years in equal amounts which are contingent on revenue growth, gross margin, and EBITDA generation targets. The Vendor is also entitled to additional earn out of US$50,000 on each US$1.0 million annual revenue growth in excess of US$7.0 million annual revenue for up to US$3.0 million.
Founded in 2015 in Gainesville, Florida, Gemini Water designs, builds, installs, and commissions large-scale desalination and wastewater treatment systems using membrane-based technologies. Gemini Water systems have 7 million gallons per day (GPD) of potable and wastewater treatment capacity across 22 locations in the Caribbean and Texas.
“Today we progress our long-term growth strategy by expanding our cleantech product line and geographic footprint into the U.S. and Caribbean markets,” said Scott MacFabe, CEO of BluMetric. “This acquisition improves our market accessibility by covering a combined population almost ten times the size of Canada’s in regions that are significantly more water stressed. Gemini Water has developed an impressive solution for managing water shortages within complementary customer verticals from private developments, and government infrastructure to the leisure market supporting resorts and international cruise lines.”
For the twelve-month period ending June 30, 2024, based on unaudited figures currently available, Gemini’s revenues stood at approximately US$7.3 million (CA$9.8 million) with historic EBITDA margins exceeding 10%. In addition, Gemini Water is currently in St. Kitts and Nevis to design, build, and install a two million gallons per day (GPD) desalination plant. There is a remaining balance of US$9.3 million (CA$12.5 million) on the contract, and the project is expected to be completed by the end of calendar year 2025. The Company is not assuming any long-term debt of Gemini on Closing.
BluMetric believes the strategic nature of this acquisition provides the following:
- Ability to diversify its cleantech customer base into new industrial and commercial applications
- Backfill the longer sales cycles observed in the Military segment with the shorter sales cycles in Gemini Water’s client base
- Share know-how and proprietary expertise to mutually strengthen both companies’ service offerings
- Jump start the establishment of a manufacturing presence in the U.S. to take advantage of potential American demand for BluMetric’s military technologies
- Leverage financial and personnel resources to help Gemini Water execute on its accelerating order backlog
The acquisition of Gemini is an arm’s length transaction, and the issuance of the Closing Equity Consideration will not result in the creation of a new Insider. No finder’s fee was payable by the Company.
Pursuant to the Company’s Board compensation policy, BluMetric has granted options of 150,000 common shares to an Executive of the Company. These options are granted effective September 24, 2024, vest over two years, and are exercisable into common shares of BluMetric at a price equivalent to the 5-day VWAP of $0.60 per share for a period of seven years.
