Monday, December 11, 2006

Investing & Divesting in the Water Industry

IR Magazine:
Aqua America, the biggest publicly traded water utility in the US, has announced an aggressive blitz of gambits, sacrificing cash for assets everywhere it can. Early this year, the company’s management said they were on track to conclude 25 to 30 new acquisitions initiated in 2005, up from a remarkable track record of absorbing 26 companies in 2004. In November 2005, by contrast, Germany’s RWE announced it would divest its major water holdings, Thames Water and American Water Works, by the end of 2007. The company recently got partway to its goal with the sale of Thames Water to Australia’s Macquarie for $8.9 bn. Interestingly, despite divergent strategies, both companies are getting a round of applause from their investors and analysts.