Allete Inc. is expanding its water treatment business by buying Plymouth-based Tonka Water.
The Duluth energy company that operates Minnesota Power broke into the water management industry in January 2015 when it bought U.S. Water Services Inc., which serves about 4,800 industrial customers.
“The addition of Tonka Water to the U.S. Water family expands our integrated capabilities in the industrial market and broadens our overall equipment offerings into the municipal market,” said U.S. Water CEO LaMarr Barnes. “Their experienced employees will strengthen our engineering capabilities, and allow us to further leverage our chemical and service offerings to provide our customers more options.”
U.S. Water is an important part of Allete’s future. Allete bought the St. Michael-based company for $168 million to expand into a nonregulated industry related to energy and water.
In 2016, U.S. Water accounted for $137 million of Allete’s $1.3 billion in revenue and had 450 employees.
Tonka, which has 60 employees, supplies both industrial and municipal water customers. Allete did not disclose Tonka’s revenue.
U.S. Water helps industrial and municipal customers prevent the buildup of unwanted deposits and prevent corrosion in water-driven energy systems. The company also helps those customers conserve, reuse and treat water within those systems.
In investor presentations, Allete said that U.S. Water competes in an industry worth about $34 billion and is growing, but fragmented. Allete believes U.S. Water presents opportunities for both organic growth and more merger and acquisition activity.
Tonka is not the first acquisition for U.S. Water. Allete also has purchased Georgia-based A and W Technologies Inc., in November 2015 and Water & Energy Systems Technology Inc., in Los Angeles in November 2016.
Terms of the Tonka Water purchase were not disclosed but the company has said it would pursue the acquisition within a price range of $10 million to $50 million.