The Xylem senior notes offering raised $1.5 billion to help finance the water-technology company’s planned purchase of the Cornell Pump and Roper Pump businesses.
Xylem (NYSE: XYL) issued three equal $500 million tranches with maturities in 2029, 2032 and 2037. The securities are senior unsecured obligations and rank equally with the company’s other unsubordinated unsecured debt.
Xylem Senior Notes Offering Spreads Maturities
The 2029 notes carry a 5.25% annual coupon, the 2032 tranche pays 5.45% and the 2037 securities pay 5.85%, according to Xylem’s official SEC filing.
Interest on the shortest tranche will be paid twice a year beginning in March 2027. Payments on the 2032 and 2037 notes begin in January 2027 and will also be made semiannually.
Xylem plans to combine the proceeds with cash on hand to fund all or part of the pump-business purchase price, transaction expenses and general corporate purposes. The offering has closed, but the acquisition remains subject to its separate closing conditions.
Acquisition Failure Would Trigger Redemption
If the pump acquisition does not close by August 10, 2027, or a later permitted termination date, Xylem must redeem all three note series at 101% of principal plus accrued interest. The same requirement applies if the purchase agreement is terminated or Xylem abandons the transaction.
That provision protects bondholders from remaining invested in acquisition financing after the intended transaction disappears. It would also require Xylem to fund the 1% premium and accrued interest if a mandatory redemption occurs.
The notes include customary limits on secured debt, sale-and-leaseback transactions and transfers of substantially all assets. Certain changes of control accompanied by ratings downgrades would require Xylem to offer to repurchase the debt at 101% of principal.
The different maturities spread repayment obligations across eight years rather than concentrating the full principal amount on a single date.
Closing the Cornell and Roper acquisition is now the main transaction milestone. Until then, Xylem carries the interest expense from the issued notes while the proceeds remain available to fund the purchase.
