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California Water Service Group's CWT unit Hawaii Water Service has inked a deal to acquire Keauhou Community Services, Inc.'s wastewater system assets. Also, the company will provide wastewater utility service to its customers in Keauhou on the island of Hawaii.
The subsidiary has its presence in the Keauhou system since 2018 through an operation and maintenance contract. With this acquisition, 1,500 more customers will be added to its existing base, expanding its operations further.
Notably, the agreement is subject to the approval of the Hawaii Public Utilities Commission.
California Water Service has been boosting its operations via organic and inorganic prospects. In October, the utility completed the Palos Verdes Peninsula Water Reliability Project, increasing the local residents’ reliability on the drinking water infrastructure on the Palos Verdes Peninsula.
Moreover, the company is also broadening its business scope by making strategic buyouts. In October, its arm New Mexico Water Service entered into an agreement to acquire Animas Valley Land and Water Co., which on conclusion, will win 2,000 customers for California Water Service in northwest New Mexico. Also, in September, Hawaii Water Service secured an approval to purchase Kalaeloa Water Company from Hunt Companies and in June, it bought Rainier View Water Company.
Need for Acquisitions
Growth by acquisition policy is essential in the fragmented water utility space. This is because small water and wastewater service providers find it difficult to make regular investments in maintaining and bettering the aging infrastructure and providing an uninterrupted water supply 24X7.
Thus, consolidation enables the big water suppliers to make crucial investments in infrastructure to provide pure water as well as wastewater services to its new customers at reasonable prices. Customers are also benefiting from the integrations as they receive high-quality and reliable services.
California Water Service apart, other water utilities like American Water Works Company AWK, Global Water Resources, Inc. GWRS and Essential Utilities WTRG also are making strategic acquisitions and fortifying their footprint.
Zacks Rank & Price Performance
Currently, the company flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of California Water Service have gained 12.8%, outperforming the industry’s rise of 10.8% in the past six months.
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