Aqua America purchases American Water's Ohio operations; American Water
purchases Aqua America's New York operations
BRYN MAWR, Pa.--(BUSINESS WIRE)--
Aqua America, Inc. (NYSE: WTR) announced today an agreement with
American Water Works Company, Inc. (NYSE: AWK) to purchase all of
American Water's regulated operations in Ohio and to simultaneously sell
Aqua's regulated operations in New York to American Water. Both
companies are now the largest investor-owned water utilities in each of
the two respective states.
As a result of this transaction, Aqua will acquire approximately $98
million in additional rate base and grow its customer base in Ohio by
approximately 57,280 additional customers. The transaction will allow
Aqua to spread its fixed costs over more customers in Ohio, which should
provide more cost efficiency to help address future rates.
Under the agreement, Aqua America will purchase from American Water 8
water systems and 1 wastewater system in Ohio, which serve approximately
50,730 water and approximately 6,550 wastewater connections for
approximately $120 million. The systems serve parts of nine counties
primarily in central and northeast Ohio. The acquisition will increase
the customer base of Aqua Ohio by approximately 66 percent.
In a separate agreement, Aqua America has agreed to sell its 7 water
systems, which serve approximately 50,520 customers in New York to
American Water's New York subsidiary for approximately $71 million,
making Long Island American Water the state's largest investor-owned
water utility. Aqua America's sale of its New York operations will
conclude its regulated operations in that state.
"This transaction demonstrates the success of our
growth-through-acquisition strategy where we continue to plan and
execute our growth efforts in states like Ohio," said Aqua America
Chairman and CEO Nicholas DeBenedictis. "Being the only large water
utility in Ohio will allow Aqua America to focus our efforts in a state
where we already have a critical mass of customers and can also focus in
an area that offers opportunities for the water-energy nexus that could
have a positive impact on the future of our company."
In addition to customer growth, Ohio offers other potential business and
environmental opportunities for Aqua America. Speaking before the Citi
Climate Change and Water Conference earlier this month, DeBenedictis
said the company is prepared to take a responsible and active role in
what is becoming the next energy boom in Ohio, Pennsylvania, Texas and
some other states—natural gas drilling. "Shale drilling for natural gas
is a very water-intensive business that can provide an economic boost
well into the future if it's done right environmentally."
Aqua's sale of its New York operations and acquisition of American
Water's Ohio operations is consistent with its strategy to consolidate
its customer base in fewer states to improve its economies of scale. A
priority is given to states that provide a regulatory opportunity for
capital investment surcharges and consolidated rates.
Both companies commended this agreement as a way to strengthen
operations in their respective states, creating better economies of
scale and providing additional opportunities to improve customer
service. The closing on each transaction is subject to the closing on
the other transaction and the purchase price in each transaction is
subject to certain adjustments as of their respective closing dates. The
transactions are subject to certain regulatory approvals and Aqua
America and American Water expect both acquisitions to close during the
first quarter of 2012.
"This transaction makes perfect business sense for both companies as
Aqua America is better suited to own and operate the American Water
systems in Ohio, growing its customer base to approximately 145,000 and
proactively working with local communities, towns, and environmental and
economic regulators. American Water, after the purchase, will grow their
operations into the largest investor-owned water utility in the state,"
said DeBenedictis. "This opportunity will enable each of these
professional companies to maximize their ability to deliver quality
water and wastewater service to customers in both Ohio and New York."
This is the second transaction of this nature between Aqua America and
American Water. Last December, Aqua purchased American Water's Texas
operations and sold American Water Aqua's Missouri operations. The move
signals Aqua America's desire to concentrate its customer portfolio in
states that demonstrate a positive regulatory environment, while
leveraging greater economies of scale and customer growth.
Aqua America is one of the largest U.S.-based, publicly-traded water
utilities and serves almost 3 million residents in Pennsylvania, Ohio,
Illinois, Texas, New Jersey, Indiana, Virginia, Florida, North Carolina,
Maine, Missouri, New York, and Georgia. Aqua America is listed on the
New York Stock Exchange under the ticker symbol WTR.
This release contains forward-looking statements within the meaning of
The Private Securities Litigation Reform Act of 1995 that address, among
other things, the size of the transactions, the effect of the
acquisition of the Ohio operations on the Company and the benefits of
the acquisition, the expected timing of the transactions and the
Company's strategy to focus its growth efforts in certain states, and
the potential business opportunities in those states and the possible
impact of those opportunities on the Company. There are important
factors that could cause actual results to differ materially from those
expressed or implied by such forward-looking statements including:
regulatory approvals for the transaction; the risk that the acquired
company's business will not be successfully integrated; the costs
related to the transaction; the inability to obtain or meet conditions
imposed for governmental approvals for the transaction; the risk that
anticipated benefits will not be obtained or will not be obtained within
the time anticipated; and other key factors that we have indicated could
adversely affect our business and financial performance discussed in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2010,
which is on file with the Securities and Exchange Commission. Neither
Aqua America nor American Water is under any obligation (and each
expressly disclaims any such obligation) to update or alter its
forward-looking statements whether as a result of new information,
future events, or otherwise.
WTRF
Aqua America, Inc.
Mia Angiolillo
Senior Communications
Specialist
610-520-6342
mcangiolillo@aquaamerica.com
or
Brian
Dingerdissen
Director, Investor Relations
610-645-1191
bjdingerdissen@aquaamerica.com
Source: Aqua America, Inc.
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