Illinois American Water Completes Acquisition Of Metro East Sanitary District System

Rhea-AI Summary

Illinois American Water has completed an $8.4 million acquisition of the Metro East Sanitary District (MESD) wastewater system, adding approximately 5,600 customers in the Metro East area near St. Louis. The acquisition includes the Eagle Park and Lansdowne wastewater systems. The company plans significant capital investments over the next five years, including improvements to pumping stations, lift stations, and collection systems. This acquisition follows recent purchases of wastewater systems in Alton, Granite City, Godfrey, Grafton, Jerseyville, and Shiloh. Customers will begin receiving combined water and wastewater bills during November-December 2024 billing cycles.

Positive

• Acquisition adds 5,600 new customers to existing footprint
• Strategic expansion in Metro East area strengthens market presence
• Planned capital improvements to enhance system infrastructure
• Integration with existing water service operations for majority of customers

Negative

• Significant capital expenditure required ($8.4M acquisition plus upcoming infrastructure investments)
• Operational costs expected to increase due to required system improvements

Insights

Financial Analyst

The $8.4 million acquisition of MESD's wastewater system represents a strategic expansion of Illinois American Water's service territory, adding 5,600 new customers to their Metro East footprint. This follows a pattern of regional consolidation, with recent acquisitions in Alton, Granite City, Godfrey, Grafton, Jerseyville and Shiloh. The deal strengthens AWK's regulated utility business model by expanding its rate base through infrastructure investment opportunities.

Planned capital improvements to pumping stations, lift stations and collection systems will generate additional regulated returns while improving system reliability. The integration benefits include billing synergies since most MESD customers already receive water service from Illinois American Water. While relatively small compared to AWK's $26.5 billion market cap, this bolt-on acquisition aligns with their growth strategy of consolidating fragmented water utilities.

Adds Approximately 5,600 Customers In Company’s Metro East Footprint Near St. Louis

MADISON, Ill.--(BUSINESS WIRE)-- Illinois American Water has completed its $8.4 million acquisition of the wastewater system of the Metro East Sanitary District (MESD). The wastewater system acquisition includes the Eagle Park and Lansdowne wastewater systems and adds approximately 5,600 customers to the company’s footprint in the Metro East area near St. Louis.

“We thank the leadership of MESD for their vote of confidence in us,” said Illinois American Water President Rebecca Losli. “We have provided water service in the Metro East for more than 125 years. Our company and team of experienced employees are vested in the Metro East and look forward to providing high-quality wastewater services to the communities. We are well positioned to invest in aging infrastructure by leveraging our resources and expertise to address and provide solutions for their water and wastewater needs for years to come.”

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

Illinois American Water is planning significant capital investments in the MESD wastewater system over the next five years. Operational improvements will be made to the Lansdowne and Venice pumping stations and various lift stations. In addition, the investment will include cleaning and inspecting of the force mains and sewer piping as well as improvements to the collection system.

“System improvements will be made to the MESD wastewater system so that we can continue to meet the wastewater service needs of our customers and meet all regulatory requirements,” said Losli. “Our capital improvements are made strategically and with our customers’ best interests in mind.”

The Illinois Commerce Commission approved the Asset Purchase Agreement on November 7, 2024.

The majority of MESD customers receive their water service from Illinois American Water. Their monthly wastewater bill will now be included on the monthly water bill from the company. Customers will start receiving their combined bills for water and wastewater services from Illinois American Water during the November-December 2024 billing cycles. Customers who do not receive water service from Illinois American Water will receive a wastewater bill from Illinois American Water in November-December 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241113178569/en/

Media

Anna Kubas

Senior Manager, External Communications

Illinois American Water

Anna.Kubas@amwater.com

Source: Illinois American Water

FAQ

How much did Illinois American Water pay for the MESD wastewater system acquisition?

Illinois American Water paid $8.4 million for the acquisition of the MESD wastewater system.

How many new customers will AWK gain from the MESD acquisition?

The acquisition adds approximately 5,600 customers to Illinois American Water's Metro East footprint.

When will MESD customers start receiving bills from Illinois American Water?

Customers will start receiving their bills from Illinois American Water during the November-December 2024 billing cycles.

What improvements are planned for the acquired MESD system?

Planned improvements include upgrades to Lansdowne and Venice pumping stations, lift stations, cleaning and inspecting force mains and sewer piping, and collection system enhancements.