Aqua America Inc.
) announced that commissioners of Sarasota County, Fla. yesterday
agreed to go ahead with the purchase of the company's water and
wastewater operations in Sarasota. This will be the last of the
five separate divestments carried out by Aqua America as part of
its planned divestiture of its entire Florida assets.
The agreement is expected to be completed by late 2013 or at
the start of the first quarter of 2014. The Sarasota asset sale
will fetch Aqua America roughly $36.8 million. The company
concluded the divestment of the other Florida operations in early
The proceeds from these divestitures will help Aqua America to
continue its investments in modernization and technological
innovation, which are imperative for the company to stay well
positioned in the market. The company has already invested $134.9
million for upgrading its water infrastructure in the first half
With the closure of the Sarasota sale, Aqua America's core
operational portfolio will be centered around eight states -
Pennsylvania, Ohio, North Carolina, Illinois, Texas, New Jersey,
Indiana and Virginia. All these operations enjoy economies of
scale and will act as key growth drivers.
Water utilities like Aqua America are on the verge of a major
transformation. With trying economic fundamentals, climate
volatility and aging infrastructure issues, the need to revamp
these utilities has become unavoidable.
Across America, water utilities are increasingly adopting the
acquisition and partnership strategy to cope with rising
operating costs and competition from conventional utilities. This
explains Aqua America's slew of asset purchases in 2013. The
latest was the buyout of the water system of the Bristol
Township, Pa. We believe asset consolidations via the inorganic
route will remain an important growth path for Aqua America in
However, water utilities still face financial crunch owing to
budgetary constraints in the U.S. Indeed billions of dollars need
to be spent in the coming years to update the age-old water
Aqua America currently carries a Zacks Rank #3 (Hold). Other
water utilities looking good at the moment are Zacks Ranked #1
Connecticut Water Service Inc.
) and Zacks Ranked #2 (Buy)
Consolidated Water Co. Ltd.
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AQUA AMER INC (WTR): Free Stock Analysis
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