Illinois American Water Completes Acquisition Of Granite City’s Wastewater Treatment Facility

Rhea-AI Summary

Illinois American Water, a subsidiary of American Water, completed the acquisition of Granite City's wastewater treatment plant for $86 million, adding approximately 26,000 wastewater customers to its footprint. The company plans to invest $40 million in capital improvements in the plant in the first five years of ownership, supported by the Granite City Council and Mayor. This acquisition aligns with Illinois American Water's strategy of expanding its presence in the wastewater sector and leveraging its expertise to meet community needs.

Insights

Market Research Analyst

The acquisition of the wastewater treatment plant by Illinois American Water for $86 million represents a strategic expansion within the company's existing operational footprint. The addition of roughly 26,000 wastewater customers could have a significant impact on the company's revenue streams and cost structure. The capital investment of $40 million in the plant over the next five years indicates a commitment to improving infrastructure and service quality, which could enhance customer satisfaction and retention.

From a market perspective, this move may signal to investors that Illinois American Water is actively pursuing growth through acquisitions, which could potentially lead to economies of scale and improved operational efficiency. Moreover, the preservation of jobs as part of the acquisition could foster community goodwill and provide a stable workforce, which is beneficial for long-term operational continuity.

Financial Analyst

The financial implications of the transaction for Illinois American Water and its parent company, American Water, are multifaceted. The purchase price of $86 million needs to be evaluated against the expected incremental cash flows from the additional customer base. The planned capital investments suggest a forward-looking approach to asset management, which could lead to increased depreciation and maintenance costs, but also to potential efficiency gains and compliance with environmental regulations.

Investors should monitor the impact of this acquisition on the company's debt levels and return on investment. The funding of the acquisition and the capital improvements will likely affect the company's balance sheet and could influence future dividend policies and credit ratings.

Environmental Policy Analyst

Illinois American Water's acquisition is also relevant from an environmental and regulatory standpoint. The commitment to upgrade the wastewater treatment plant aligns with broader industry trends towards sustainable water management and regulatory compliance. It is imperative to consider the potential long-term environmental benefits of such investments, which may include reduced pollution and improved water quality.

Furthermore, the company's actions resonate with the increasing demand for responsible corporate behavior in managing essential public resources. Stakeholders, including regulators and the local community, will likely scrutinize the company's performance in achieving the promised environmental improvements.

Acquisition Adds Approximately 26,000 Wastewater Customers In Company’s Footprint

GRANITE CITY, Ill.--(BUSINESS WIRE)-- Illinois American Water, a subsidiary of American Water completed its acquisition of the assets of the wastewater treatment plant of Granite City for $86 million. The wastewater treatment plant serves approximately 26,000 customer connections, including approximately 10,500 direct and 15,500 indirect customers in surrounding communities. This transaction follows Illinois American Water’s acquisition of the wastewater collection system of Granite City in 2020, where the company has been the water service provider for over 130 years.

“We thank the Granite City Council for its vote of confidence, and we look forward to growing our partnership with Granite City residents and businesses,” said Illinois American Water President Rebecca Losli. “Our company and team of experienced employees are invested in the Granite City community and are well positioned to leverage our resources and expertise to address both their water and wastewater needs for years to come.”

Granite City Mayor Mike Parkinson said a key reason for the sale is that Illinois American Water will upgrade the Granite City Wastewater Treatment Plant and is planning approximately $40 million in capital investments at the plant in the first five years of ownership.

“We support this agreement with Illinois American Water because it is in the best interests of the Granite City community, today and tomorrow,” said Parkinson. “It will put our city’s wastewater assets and operations into the highly capable hands of Illinois American Water, and we are also able to preserve and transition all jobs for the employees.”

Mayor Parkinson added that proceeds from the sale would allow the city to invest in other critical, community needs.

“Municipalities through the country, and in Illinois, are looking at utilities like Illinois American Water for solutions on water and wastewater infrastructure needs,” added Mayor Parkinson.

In the Metro East, in recent years, Illinois American Water has purchased the wastewater system assets of Alton, Godfrey, Grafton, Jerseyville and Shiloh.

The Granite City Council approved the Asset Purchase Agreement on Wednesday, April 5, 2023, and the Illinois Commerce Commission (ICC) approved the sale on Jan. 31, 2024.

About American Water

American Water (NYSE: AWK) is the largest regulated water and wastewater utility company in the United States. With a history dating back to 1886, We Keep Life Flowing® by providing safe, clean, reliable and affordable drinking water and wastewater services to more than 14 million people with regulated operations in 14 states and on 18 military installations. American Water’s 6,500 talented professionals leverage their significant expertise and the company’s national size and scale to achieve excellent outcomes for the benefit of customers, employees, investors and other stakeholders.

For more information, visit amwater.com and join American Water on LinkedIn, Facebook, X and Instagram.

About Illinois American Water

Illinois American Water, a subsidiary of American Water, is the largest investor-owned water utility in the state, providing high-quality and reliable water and wastewater services to approximately 1.3 million people. American Water also operates a quality control and research laboratory in Belleville.

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View source version on businesswire.com: https://www.businesswire.com/news/home/20240311247450/en/

Media

Terry Mackin

Director, External Communications

Illinois American Water

Terry.mackin@amwater.com

Source: American Water Illinois

FAQ

What was the acquisition cost of the wastewater treatment plant in Granite City by Illinois American Water?

The acquisition cost was $86 million.

How many wastewater customers were added to Illinois American Water's footprint through the acquisition?

Approximately 26,000 wastewater customers were added.

What capital investments is Illinois American Water planning at the Granite City Wastewater Treatment Plant?

Illinois American Water is planning approximately $40 million in capital investments in the first five years of ownership.

When did the Granite City Council approve the Asset Purchase Agreement for the acquisition?

The Granite City Council approved the Asset Purchase Agreement on Wednesday, April 5, 2023.

Which regulatory body approved the sale of the wastewater treatment plant acquisition by Illinois American Water?

The Illinois Commerce Commission (ICC) approved the sale on Jan. 31, 2024.