Xylem (NYSE:XYL) is Monday’s biggest loser on the S&P 500, -8.9%, after agreeing to buy Evoqua Water (NYSE:AQUA) in the largest-ever water technology merger deal, creating a company generating more than $7B in annual revenue.

Xylem (XYL) CEO Patrick Decker told a conference call with analysts that he expects few antitrust hurdles to closing the deal, seeing very little overlap in the businesses.

Raymond James analyst Pavel Molchanov had downgraded the stock earlier this month, citing the company’s lack of M&A activity among other reasons, but “today’s announcement is emphatically not what we had in mind,” saying the deal is “unlikely to be accretive any time soon, entails heightened integration risk, and is subject to shareholder vote uncertainty.”

Molchanov said the premium paid for the deal is a “textbook instance of overpaying”: At 21x his 2024 adjusted EBITDA estimate, Evoqua (AQUA) is “being acquired for nearly double the multiple vs. where the stock traded in its first year as a public company,” the analyst said.

The lack of overlap points to heightened integration risk, Molchanov said, given that Xylem (XYL) is almost entirely a hardware manufacturer while Evoqua (AQUA) derives more than half of its revenue from service and aftermarket.

Xylem (XYL) “has shown good revenue growth but is overvalued,” Prasanna Rajagopal writes in an analysis published a month ago on Seeking Alpha.