American Water Works Company, Inc., the largest publicly
traded water services company in the United States, and RWE AG, a leading international provider of
electricity, gas, water and wastewater management services, have entered into a
definitive agreement under which RWE will purchase all the outstanding shares
of American Water at a price of $46 per share in cash.
RWE's all-cash proposal represents a premium of 36.5% to the
average closing price of American Water shares over the 30 trading days ended
September 10, 2001, and a 29.5% premium above the all-time high closing price
of $35.52. The proposed transaction has a total value of approximately US$7.6
billion, including the assumption of approximately $3.0 billion in debt
American Water had outstanding as of June 30, 2001.
Upon completion of the transaction, American Water will be
combined with the U.S. operations of Thames Water, RWE's London-based
international water services business. American Water will manage the joint
operations in North and South America. American Water's CEO, Jim Barr, will
report directly to Bill Alexander, CEO of Thames Water.
The transaction is expected to take more than a year to
complete, following approval by American Water's shareholders and appropriate
state regulatory agencies. It is expected to have no effect on the Company's
previously announced plans to acquire Azurix North America as well as the water
and wastewater assets of Citizens Communications, or to sell its Salisbury, MA operations
and divest its New England operations to Aquarion.
Commenting on the transaction, Dr. Dietmar Kuhnt, President
and Chief Executive Officer of RWE, stated: "We are extremely pleased to
have reached this agreement with American Water Works, the largest and most
geographically diversified water services company in the US. In addition to
providing us with a top position in the U.S., the acquisition of American Water
will further establish RWE as a global leader in the provision of water
services. The development of RWE's world-class water business, in turn, will
provide greater balance to our core utility portfolio and allow us to deliver
enhanced growth and shareholder value."
Bill Alexander, Chief Executive Officer of Thames Water,
said, "American Water provides RWE and Thames Water with a highly
respected management team and a strong platform for developing our water
business in North, Central and South America, which are among the world's
largest and fastest-growing markets. Together, we will strengthen our ability
to serve the interests of our customers and employees. RWE and Thames, like
American Water, are strongly committed to preserving the environment,
participating in local activities, and otherwise adding value to the
communities in which we operate."
On behalf of the American Water Works Board of Directors,
Chairman Marilyn Ware commented that, "our professional heritage and
expertise are consistent with those of RWE and Thames Water. This transaction
pairs us with strong international partners and positions us perfectly to
continue the momentum we've created toward becoming the water resources manager
of choice in the U.S."
American Water Works President and Chief Executive Officer
J. James Barr, who will lead the integrated water services operations for the
Americas, described the transaction "a compelling combination of companies
that will create a powerful new force in the world water market and deliver
value for our customers, our shareholders, our associates, and the communities
we serve.
Over the years, through multiple consolidations, we have
been able to enhance our ability to address water resource issues throughout
the U.S. Joining forces with Thames Water and RWE is the next logical step in a
growth strategy based on the delivery of vital community services," Barr
said.
