Advanced Drainage Systems Agrees To Buy StormTrap For About $530 Million, Or $450 Million After Tax Benefits
The pipe maker plans to pay with cash and its credit line, and expects the deal to add to adjusted earnings per share in year one.
Advanced Drainage Systems agreed to buy StormTrap Investments for about $530 million, or about $450 million once the present value of expected tax benefits is counted, according to an 8-K filed Monday. The company said it will pay with cash on hand and its existing credit facility.
What the 8-K and the press release say
The purchase agreement is dated October 1. The 8-K says ADS and its subsidiary ADS Investment LLC signed it with StormTrap Investors, L.L.C., acting as representative of the sellers. The price is subject to certain purchase price adjustments.
StormTrap makes large-volume, space-constrained stormwater systems. In the press release, ADS said StormTrap had about $165 million in revenue and about $40 million in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, adjusted) over the twelve months ending July 2026.
Net of estimated tax benefits, the price is about 10 times that adjusted EBITDA, a figure that includes expected run-rate cost synergies, the company said.
Both boards approved the deal unanimously. The company also bought a representations and warranties insurance policy, which gives recourse if the sellers' statements in the agreement prove wrong. The policy is subject to a retention amount, exclusions and limits.
What it changes for ADS
ADS said the deal should add to adjusted earnings per share in the first year. It pays from cash and credit capacity rather than new shares, so the share count does not change.
The company's pitch is a new customer base. CEO Scott Barbour said ADS will use its integration experience and sales reach "to gain footing in a segment of the market focused on large volume storage solutions." He also said the deal creates chances to sell more of ADS's other products.
StormTrap CEO Nate Olds said that with ADS's sales platform, StormTrap can bring its solutions "to a far broader set of customers." ADS also pointed to federal, state and local stormwater rules as a driver of demand for StormTrap's products.
ADS shares closed at $127.27 on Friday, before the announcement.
What to watch
Closing is subject to customary conditions, including efforts to obtain required antitrust approvals. ADS expects the deal to close in the fourth quarter of calendar 2026.
PSP Capital is among the sellers. Jefferies advised ADS, and Raymond James and William Blair advised StormTrap and PSP Capital.
Regulatory approval, including antitrust clearance, is the gating item for the fourth-quarter close ADS has targeted.
