Connecticut Water Service (CTWS) to Acquire Avon Water Company in $32.4M Deal
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The Avon Water Company (“AWC”) and Connecticut Water Service, Inc. (Nasdaq: CTWS) \announced that the parties have reached an agreement for Avon Water Company to join Connecticut Water. Connecticut Water is a parent holding company based in Clinton, Connecticut which conducts its regulated water operations in Connecticut and Maine through its operating subsidiaries, The Connecticut Water Company and The Maine Water Company.
According to Robert W. Wesneski, President of Avon Water Company, Connecticut Water will continue Avon Water Company’s long tradition of providing excellent service to customers. He stated, “Our experienced team of employees will continue to serve their local customers and communities as part of Connecticut Water with access to support from Connecticut Water’s team of experienced water professionals. Connecticut Water is a highly regarded water utility company with a strong record of customer service, investment in infrastructure and stewardship of the environment.”
Eric W. Thornburg, President and CEO of Connecticut Water stated, “We are eager to have Avon Water Company join with Connecticut Water. Avon Water is widely viewed as a premier small water utility in the state and has an excellent reputation for quality and effectiveness among customers, regulators and local officials. Customers will benefit by being part of a larger, regional company, which has a size and presence that provides for operational efficiencies, greater purchasing power, and other economies of scale which can drive long term cost savings.” Mr. Thornburg further stated, “We are also pleased that Bob Wesneski will remain in his leadership role, ensuring continuity of operations and strong relationships with local community leaders.”
Avon Water Company serves about 4,800 customers in the Farmington Valley communities of Avon, Farmington, and Simsbury, and is located near Connecticut Water’s existing operations in Avon and Farmington.
The agreement provides for the payment of stock consideration valued at approximately $26.2 million and a cash payment of $6.2 million for a total payment to shareholders of $32.4 million. Holders of Avon Water Company common stock will receive 80% of the transaction consideration in the form of shares of CTWS common stock in a tax-free exchange. The transaction reflects a total enterprise value of approximately $36.6 million, with the $32.4 million paid to shareholders and the assumption by Connecticut Water of approximately $4.2 million in long-term debt of Avon Water Company.
The transaction will require an approval vote by the shareholders of Avon Water Company and approval by each of the Connecticut Public Utilities Regulatory Authority (“PURA”) and the Maine Public Utilities Commission (“MPUC”). The parties plan to file applications with both PURA and the MPUC in the fourth quarter of 2016 with an anticipated closing by April 2017. Upon receipt of regulatory approval and the closing of the transaction, the company will maintain its separate corporate existence and current name, Avon Water Company. At the closing, Avon Water will become a wholly owned subsidiary of CTWS and a sister company to Connecticut Water and Maine Water. The transaction will not affect the rates or service for any of those water company customers.
This is the second agreement announced in 2016 of a regulated Connecticut water and/or wastewater utility joining CTWS. Less than 6 months ago, on May 10, CTWS announced that it had reached an agreement to purchase the Heritage Village Water Company (“HVWC”). HVWC serves 4,700 water and 3,000 wastewater customers in the communities of Middlebury, Oxford and Southbury. A final PURA decision on that acquisition is expected in early December with an anticipated closing by the end of the year.
With the addition of these two companies, CTWS will have grown its customer base by more than 45% since 2011 through acquisitions in Connecticut and Maine, with HVWC and AWC combined representing 8% customer growth for the company. CTWS will now serve more than 132,000 water customers, or more than 450,000 people in 80 communities across Connecticut and Maine, and more than 3,000 wastewater customers in Southbury, Connecticut.
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