Hydro International, the innovative water industry technology company, has agreed to a £28m takeover by a private investment firm.
Ely Acquisition, an investment vehicle ultimately owned by the London-based Hanover Active Equity Fund, said the public-to-private deal would help Hydro reach its full potential. 
Clevedon-based Hydro develops advanced technology that manages stormwater and wastewater. Its core markets are the UK and US, where it has three offices, but also operates globally including in China, Russia, Brazil and across the EU. It has been listed on the London Stock Exchange’s AIM market since 2005.
Shares in Hydro rose by nearly 19.4% in May when details of the approach were confirmed by the company to shareholders. The previous day an upbeat AGM statement by chairman Ian Griffiths had triggered a near 18% increase in the share price.
Under the terms of the recommended acquisition, Hydro shareholders will be entitled to receive £1.94 in cash for each Hydro share or, for every £1 of cash consideration, £1 nominal value of loan notes.
Hydro chairman Ian Griffiths said: “Whilst Hydro is well placed to continue to deliver on its stated strategy, the proposed acquisition by Hanover will enable shareholders to crystallise an immediate and certain value in cash.
“It represents a significant premium to historic share price trading levels and the Board of Hydro has unanimously recommended Hanover’s offer.”
Hanover Investors founding partner and Ely Acquisition director Matthew Peacock said: “We believe that Hydro is a great company with significant potential, but that given its size it would fare better as a private company.
“Our proposal provides Hydro shareholders with an opportunity to realise a significant premium over the value of their shares prior to Hanover Investors acquiring a stake in the company.”
Hanover has a history of investing in under-performing public businesses. Previous acquisitions and investments have included specialist financial and legal advice business Fairpoint, telecoms test and measurement firm Spirent and electronics repair company Regenersis.
At Hydro’s AGM last month Mr Griffiths said the firm had continued to build on last year’s “substantial progress” in implementing its strategic plans to create a global business capable of delivering profitable sustainable growth.
Order intake during the first quarter of 2016 showed “solid double-digit growth” over the equivalent levels for last year.
In the year to December 31, Hydro’s adjusted profit before tax rose by 29% to £2.41m on revenue up 18% to £37.9m.
Hydro’s shares were trading at 191.5p shortly after the market opened this morning, giving it a market value of £27.63m.
