Algonquin Power & Utilities (AQN) Expand Operations Via Buyout
The subsidiary of Algonquin Power & Utilities (AQN) completes its previously-announced acquisition of New York American Water Company for $608 million.
Algonquin Power & Utilities Corp.’s AQN unit Liberty Utilities closes the buyout of New York American Water Company, Inc. from American Water Works Company, Inc. AWK. The deal was announced in November 2019 for a total value of $608 million.
New York American Wateris a regulated water and wastewater utility serving more than125,000 customer connections across seven counties in Southeastern New York. The acquisition will add nearly 1,270 miles of water mains and distribution lines to Liberty Utilities’ operations.
Investments in Aging Infrastructure
A significant portion of the existing water and wastewater pipelines in the United States became old and is rapidly reaching the end of an effective service life. Per the American Society of Civil Engineers, water main breaks occur every two minutes in the United States due to the aging of the existing water infrastructure, inducing wastage of six billion gallons of potable water each day. This runs into massive losses for the water utility operators. Therefore, to upgrade and refurbish the water infrastructure, a substantial amount of investment is required.
Per the U.S. Environmental Protection Agency, an estimated $744 billion investment is necessary to maintain and expand the drinking water and wastewater services to meet demand over the next 20 years.Water utilities are ensuring regular investments to upgrade the infrastructure.
AQN has plans to invest $12.4 billion during the 2022-2026 time frame to strengthen its infrastructure and add renewable power to itsgeneration portfolio. American Water Works has plans to invest $13-$14 billion in the 2022-2026 time period and $28-$32 billion from 2022 to 2031. Other water utilities like Essential Utilities WTRG and California Water Service Group CWT are also making smart acquisitions and the necessary investments to upgrade their infrastructure.
Essential Utilities will continue to make systematic investments to strengthen its water, wastewater and natural gas infrastructure and aims to invest $3 billion from 2021 through 2023 to fortify operations and efficiently serve the expanding customer base.
In2020, WTRG closed four municipal acquisitions, which won 12,184 customers. During the five-year period ended Dec 31, 2020, Essential Utilities expanded its utility operations by completing 46 acquisitions of water or wastewater utilities, which added 87,000 customers.
Essential Utilities intends to continue pursuing acquisitions of government-owned, and regulated water and wastewater systems that provide services in areas near its existing and new service zones. At present, there are seven pending acquisition deals, which will add 234,075 customers to the existing base when completed.
California Water Service’s capital expenditure for 2022, 2023 and 2024 is $355 million, $360 million and $365 million, respectively. CWT’s four acquisitions are contingent on regulatory approvals, which will add up to 3,400 water connections and up to 4,700 wastewater connections. Also, in the third quarter, it filed for the Rainier View acquisition, decision of which is awaited in second-quarter 2022.
Zacks Rank & Price Performance
Currently, AQN carries a Zacks Rank#3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of AQN have lost 4.5% against the industry’s rise of 10% in the past six months.
Image Source: Zacks Investment Research
Zacks’ Top Picks to Cash in on Artificial Intelligence
This world-changing technology is projected to generate $100s of billions by 2025. From self-driving cars to consumer data analysis, people are relying on machines more than we ever have before. Now is the time to capitalize on the 4th Industrial Revolution. Zacks’ urgent special report reveals 6 AI picks investors need to know about today.See 6 Artificial Intelligence Stocks With Extreme Upside Potential>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
American Water Works Company, Inc. (AWK): Free Stock Analysis Report
California Water Service Group (CWT): Free Stock Analysis Report
Algonquin Power & Utilities Corp. (AQN): Free Stock Analysis Report
Essential Utilities Inc. (WTRG): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research