In an effort to capitalise on the growing worldwide awareness of the hazards associated with water shortage, the water technology company Xylem Inc. agreed to purchase Evoqua Water Technologies Corp. for $7.5 billion in all-stock transaction on Monday. According to Friday's closing prices, owners of Evoqua will receive 0.480 new Xylem shares for every Evoqua share they currently own, a premium of nearly 29%.

Investor disapproval of the high price tag caused shares of Xylem, which offers services for the treatment of water and wastewater, to decline by about 8% on Monday after recovering some earlier losses.

The majority of Evoqua's operations have shown strong interest in its wastewater management sector recently, but the purchase price, which totals $7.5 billion with debt, alarmed investors, according to CFRA analyst Jonathan Sakraida.

Although it is common for stock prices of buyers to experience pressure from investors following the announcement of sizable transactions, the recent rise in capital costs and general macroeconomic unpredictability have made Wall Street investors even more risk-averse to deals than usual, making it more difficult to successfully complete mergers.

For instance, after the industrial behemoth announced an all-cash aggressive acquisition approach for National Instruments Corp. earlier in January, investors have penalised shares of Emerson Electric.

On a conference call with analysts, Xylem executives explained the expense and stated that they anticipated the purchase to result in cost synergies of around $140 million in three years. After the merger is complete, Xylem stockholders will own approximately 75% of the merged business.

According to Xylem Chief Executive Patrick Decker, "clearly there is upside, both in cost but mostly revenue," adding that the firms had not yet committed to revenue targets.