What sent the Envirosuite share price soaring 11% today?

The Envirosuite share price has bounced by more than 11% today on details of a new acquisition. We take a closer look at the deal.

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The Envirosuite Ltd (ASX: EVS) share price is today soaring higher with the company releasing information regarding a potential acquisition. Envirosuite's share price is up by 11.54% at the time of writing to a price of 14.5 cents.

What does Envirosuite do?

EnviroSuite is an environmental management technology company that provides services through its SaaS platform. The Envirosuite platform offers environmental monitoring, management and investigative capabilities. The platform is incorporated into a number of diverse operations from waste water treatment to large scale construction, open cut mines and port operations.

The company boasts more than 500 customers worldwide. According to a company presentation, there's been a 38-fold increase in global environmental laws in the regulation of pollution in recent years. Envirosuite's clients include organisations in China, airports, and companies such as Rio Tinto Limited (ASX: RIO).

Acquisition news

Envirosuite has today announced a strategic acquisition to boost its offering to global water treatment customers. The deal involves a binding agreement to acquire 100% of water modelling R&D technology software company AqMB Holdings Pty Ltd for a total consideration of $1.35 million.

AqMB's software is shown to directly reduce water treatment plant operating costs by up to 35%. Thanks to this technology, Envirosuite will now launch its new 'smart water' modelling product. Smart Water seeks to address the US$7 billion global water optimisation market.

Prior to committing to the acquisition, the AqMB software was trialled at the Yinghai recycled water treatment plant in Beijing. Prior to the trial, Envirosuite had determined that a reduction of 25% was necessary. The trial exceeded expectations as it indicated a potential reduction of up to 35% or $500,000 in savings. Globally, Envirosuite has so far identified as many as 25,000 applicable sites that could benefit from the technology.

The acquisition will be funded from Envirosuite's current cash reserves. However there are still boundaries to cross as completion of the acquisition remains subject to the satisfaction of customary conditions. These are expected to be completed by the end of August this year.

What now for Envirosuite

With Australia aiming to achieve zero emissions by 2050 and a global push for sustainability worldwide, shareholders will be wanting to see this trend continue. As the economy becomes more conscious of its carbon use there will be a greater need for environmental consultancy services. This could see Envirosuite experience a positive surge in demand and bring it closer to producing profits for shareholders.

Envirosuite aims to be earnings before interest, tax, depreciation and amortisation-positive by the end of Q3 FY21. It also aims for revenue of $100 million per year by the end of the 2023 financial year.

Envirosuite CEO Peter White spoke to this tune as he claimed that "Envirosuite aims to play an increasingly important role for water asset operators around the world who are looking to solve problems relating to water supply, quality and scarcity via digital transformation."

This most recent acquisition goes some way towards addresses these needs, resulting in today's strong gains for the Envirosuite share price.

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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