New York American Water, a business wing of American Water Works Company, Inc. (AWK), announced the acquisition of water and wastewater assets of the Mt. Ebo Water Works, Inc. and Mt Ebo Sewage Works, Inc. The financial aspects of the deal were kept under wraps.
The acquisition follows American Water’s expansion of operations into upstate New York, north of its Long Island base. The purchase will enable American Water to deliver both water and wastewater services to over 400 customers located in the Fieldstone Pond condominium complex and Mt. Ebo Corporate Park in the Town of Southeast, Putnam County.
American Water has been on an acquisition spree and further plans to move ahead with its growth-by-acquisition strategy in the future. The company intends to allocate $0.7 billion for the next five years for strategic asset purchases.
American Water already maintains a healthy customer footprint in New York and the latest acquisition will further broaden the company’s customer count. The addition of Mt Ebo Sewage assets to New York American Water will contribute to economies of scale and help reduce competition.
The company’s acquisition strategy involves buying up assets in the similar line of business, which will prove to be revenue accretive. American Water recently inked a deal to purchase water and wastewater assets from City of Millersburg, KY. and provide water and wastewater service to the Millersburg County.
The flurry of asset acquisition will strengthen and boost American Water’s core offerings. In addition, American Water is focusing on increasing its wastewater operations. The company in December announced that in addition to water assets it will focus on expanding its wastewater operations as well. Besides American Water, another water utility going the acquisition route is Consolidated Water Co. Ltd. (CWCO).
American Water is seeking to obtain water-related projects from the military as well. Last year, the company won contracts worth $140 million and looks well-positioned for more contract flows as the U.S. Defense Department might issue contracts worth $11 billion by year end.
Currently, American Water Works carries a Zacks Rank #3 (Hold). Other better-placed water utilities include Artesian Resources Corp. (ARTNA) and Connecticut Water Service Inc. (CTWS). Both these stocks sport a Zacks Rank #1 (Strong Buy).
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