American Water Works Company, Inc.
) share price closed at 0.7% higher to $43.18 per share from the
previous closing price. We believe the gain reflected the
positive reaction of the market to the company's announcement of
the purchase of Dale Service Corporation.
AMER WATER WORK (AWK): Free Stock Analysis
CONN WATER SVC (CTWS): Free Stock Analysis
CALIF WATER SVC (CWT): Free Stock Analysis
MIDDLESEX WATER (MSEX): Free Stock Analysis
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American Water Works' subsidiary Virginia American Water acquired
Dale Service Corporation for $27.7 million. Initially, the
company reported its interest for this acquisition on May 2,
2013. The current acquisition of wastewater operations is the
largest acquisition by American Water Works over last 10 years.
Northern Virginia-based Dale Service Corporation is a wastewater
utility company. The company offers wastewater collection and
treatment services to roughly 20,000 customers in the Dale City
of Prince William County.
Virginia American Water and Dale Service Corporation have a
longstanding relationship. Since 1966, Virginia American Water
has been offering water services to majority of the wastewater
customers of Dale Service Corporation.
Post acquisition, Virginia American Water will directly provide
wastewater services to the Dale Service Corporation's customers.
The company's newly acquired unit will operate two wastewater
treatment set ups, having a combined capacity of 9.2 million
gallons per day.
This acquisition will enable Virginia American Water to enhance
its customer base besides experiencing operational synergy. In
addition, the inclusion of Dale Service Corporation will also
help the company to reap benefits from its existing facilities in
the region and lower competition.
We note that American Water Works is continuously acquiring new
assets along with improving existing set ups. Year to date, the
company has completed acquisitions of eight water and four
In full-year 2013, the company plans to spend $950 million for
the construction of several infrastructures, which will
subsequently help to improve reliable water and wastewater
American Water Works' continuous effort toward strategic
acquisitions and upgrading the existing infrastructure will
enable the company to provide uninterrupted water to its
customers while strengthening system competence. These factors
will subsequently improve reliability and public safety, while
maintaining government regulations.
American Water Works currently has a Zacks Rank # 2 (Buy). Other
water utilities that are worth considering include
Middlesex Water Co.
) with a Zacks Rank #1 (Strong Buy), and
Connecticut Water Service, Inc.
California Water Service Group
) each with a comparable Zacks Rank #2 (Buy).