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Mergers and Acquisitions for Water Supply Company a Growing Theme: Where are the Deals Happening?

67 WALL STREET, New York - August 29, 2012 - The Wall Street Transcript has just published its Utilities, Alternative Energy and Water Services Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Outlook for Biofuels and Biochemicals - Asia Pacific Demand for Solar Energy - Grid Parity Timelines for Alternative Energy - Water Infrastructure Development - Irrigation and Metering Technology - Water Industry Consolidation

Companies include: American Water Works Company, (AWK) and many others.

In the following excerpt from the Utilities, Alternative Energy and Water Services Report, the CEO of American Water Works discusses the outlook for his company for investors:

TWST: American Water Works has made some acquisitions and also sold businesses since we last spoke in May 2011. Please give us an update on the company's M&A activity.

Mr. Sterba: We've completed a series of transactions that has reduced the number of states that we operate in by four, while expanding in a more significant way our operations in two of the states that we were already in, Missouri and New York. We exited Texas, New Mexico, Arizona and Ohio. These series of transactions generated about $566 million of cash, and added about 50,000 to 60,000 customers. I think the last transaction closed in May, and the others closed earlier in the year or at the tail end of last year. So this process of what I'll call portfolio rationalization has been going on, and the transactions have, by and large, been completed.

We also sold one of our market-based businesses that's involved in the design and construction of small wastewater systems. It was not a business that we thought we wanted to be in in the longer term. I am very pleased with how we've come out of that, and we will continue to look at our portfolio and make sure that we're investing in the places that will have the greatest value, and that certainly includes acquisitions.

We've closed so far this year five tuck-ins, which are usually smaller-sized systems, with maybe 2000 customers or so, that are adjacent to territories we already serve, and it's done through an acquisition and a roll into one of our existing subsidiaries.

In addition, something that we're really tickled with, which we entered through a competitive process, is one of our market-based businesses, our homeowner services business, was selected by New York City to provide basic line warranty protection for 600,000 customers in the city. New York's been very good to work with, and we hope to be rolling out the offerings to those customers before the end of the year. So that's another kind of a market expansion.

In addition, I'd say another aspect - it's not M&A related - but the expansion of our provisional services in the Marcellus Shale area. In the first six months of this year, we provided as much water to drillers as we did in all of last year and we've entered into the latest new arrangement with a driller for a pipeline extension to serve another group of wells near our service area. And we're doing it in a way in which we're going to be able to also serve other residential and commercial customers off those line extensions, which we're really pleased with because it helps bring clean water to people who have been on well systems, and sometimes there is difficulty with either quality, or in a period of drought, those wells can go dry.

So those are the kinds of things that we have going on. We will continue to look at opportunities to expand the business as we always do, but we're always also going to be very careful about what we pay for that.

TWST: What do you believe are the biggest headwinds for the business over the next 12 months? And what are you doing to prepare the company to face those headwinds while minimizing the negative impact?

For more from this interview and many others, visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.