Eversource Energy Enters Major Deal to Sell Aquarion Water
Eversource Energy (NYSE: ES) has taken a significant step by announcing its decision to sell Aquarion Water Company to the newly established Aquarion Water Authority (AWA). This pivotal transaction signifies a shift in Eversource’s focus towards its primary electric and natural gas operations while enabling further investment in core business areas.
Details of the Transaction
The agreement was made public during a press briefing. The overall enterprise value of the sale amounts to approximately $2.4 billion, inclusive of $1.6 billion in cash and $800 million of net debt that will be settled at closing. This transaction emphasizes a rate base valuation of 1.7 times by the end of 2024.
Financial Implications
With this sale, Eversource aims to lower its overall debt burden while reinvesting the proceeds back into its electric and natural gas business segments. This reinvestment strategy is poised to enhance service reliability for their customer base, strengthening the organization's financial health long-term. However, Eversource has projected a loss of about $300 million related to this transaction, accounting for an estimated $140 million in income tax expense.
Company's Commitment to Service Quality
Joe Nolan, the Chairman, President, and CEO of Eversource, expressed gratitude towards Aquarion's leadership and team for their exemplary service since its acquisition in 2017. Nolan highlighted the transformation of Aquarion into the largest investor-owned water utility in New England, a testament to the collaborative efforts aimed at prioritizing customer satisfaction and safety.
Strengthening Regulatory Relationships
This transaction also allows Eversource to streamline its portfolio and bolster its balance sheet. The company underscores its commitment to working closely with regulatory bodies and stakeholders across Connecticut, Massachusetts, and New Hampshire for delivering high-quality energy services while optimizing costs.
A Commitment to Sustainable Practices
Sunder Lakshminarayanan, Interim President and CEO of both RWA and AWA, emphasized the significance of this transaction in supporting sustainable water supply strategies. AWA aims to provide customers with top-tier water services while preserving the environment and ensuring organizational stability under not-for-profit governance.
History and Service Reach of Aquarion
Aquarion Water Company, based in Bridgeport, Connecticut, caters to nearly 250,000 customers across 72 municipalities, aiding more than 775,000 residents. Founded in 1857, Aquarion has continually expanded its reach and capabilities, particularly under Eversource’s management with multiple acquisitions increasing its customer base significantly.
Regulatory Approval Process
The sale is contingent upon receiving regulatory approval from the Connecticut Public Utilities Regulatory Authority, the Massachusetts Department of Public Utilities, and the New Hampshire Public Utilities Commission. Additionally, standard closing conditions, along with the requirements of the Hart-Scott-Rodino Antitrust Improvements Act, must be fulfilled. The transaction is anticipated to conclude in late 2025.
About Eversource
Eversource (NYSE: ES) stands as a leader in corporate citizenship and has recently been recognized as the top U.S. utility on TIME's List of World’s Best Companies for 2024. The company services around 4.4 million customers in the Northeast, consolidating efforts towards a sustainable energy future featuring cutting-edge energy efficiency solutions.
About Aquarion Water Authority
Trusted since 1849, the South Central Connecticut Regional Water Authority rises to its role as a responsible steward, providing quality water services to approximately 430,000 individuals across 15 communities. Their mission encompasses being an innovative utility that enhances lives while safeguarding natural resources.
Frequently Asked Questions
What is the main reason for Eversource selling Aquarion?
Eversource aims to focus more on its core electric and natural gas operations while optimizing its financial position by reducing debt with the proceeds from the sale.
What will be the financial implications of the sale?
The company expects to realize a loss of roughly $300 million from the sale, affecting its financial performance for the fourth quarter.
What regulatory approvals are required for the transaction?
The sale must be approved by the Connecticut Public Utilities Regulatory Authority, the Massachusetts Department of Public Utilities, and the New Hampshire Public Utilities Commission.
When is this transaction expected to close?
The transaction is projected to be finalized in late 2025, subject to regulatory approvals.
How many customers does Aquarion serve?
Aquarion serves nearly 250,000 water customers, contributing to the water supply of more than 775,000 residents across multiple states.
