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Middlesex Water (MSEX) to Sell its Unit to Artesian for $6.4M

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Middlesex Water Company MSEX announced that it has entered into a definitive agreement with Artesian Wastewater Management, Inc. — a wholly-owned subsidiary of Artesian Resources Corporation ARTNA — to sell its wastewater utility business, Tidewater Environmental Services, for $6.4 million in cash and other consideration. Subject to necessary regulatory approval, the transaction is expected to be completed before Dec 31, 2021.

Middlesex Water’s wholly-owned subsidiary Tidewater serves nearly 3,600 retail wastewater customers in Sussex County, DE. Artesian Wastewater and Middlesex Water’s management decided to go ahead with this transaction and thought that it would be for the best interest of customers and shareholders of both the companies.

Water For Tomorrow

Middlesex Water has taken an initiative named Water For Tomorrow, which is an infrastructure campaign to enhance safety, reliability and resiliency throughout its water system in New Jersey. Middlesex Water plans to invest more than $295 million through 2022 in connection with this plan.

Aging of water and wastewater infrastructure is a major concern for water utility companies in the United States, and the initiative undertaken by Middlesex Water will definitely address this cause and strengthen its existing operations.

Aging of Infrastructure a Big Concern

The U.S. water infrastructure, which includes more than 2.2 million miles of pipelines, is aging and needs major repair and maintenance to provide proper services to millions of Americans. Per the findings of the American Society of Civil Engineers, water main breaks occur every two minutes in the United States due to aging of the existing water infrastructure. Pipeline breaks result in the wastage of 6 billion gallons of potable water each day and add to the loss of water utility operators. The pipeline breaks not only increase the cost of water services but also expose it to the possibility of contamination.

Billions of dollars are required to upgrade the aging water and wastewater infrastructure. Given the scenario, investor-owned utilities and the government have taken initiatives to make the necessary investments along with upgrade the aging infrastructure.

American Water Works AWK has plans to invest $10.4 billion between 2021 and 2025, and $22-$25 billion in the next decade to upgrade as well as strengthen its existing water and wastewater infrastructure. In addition to American Water, Essential Utilities WTRG, among others, decided to invest $3 billion to upgrade the existing assets.

In addition to the water utility operators, the U.S. government has made provisions for the upgrade of the aging water and wastewater assets. The American Jobs Plan has provisions for $111 billion in water and wastewater infrastructure upgrade.

Price Movement

In the past 12 months, Middlesex Water’s shares have gained 71% compared with the industry's rally of 22.6%.

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Zacks Rank

Middlesex Water currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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American Water Works Company, Inc. (AWK) : Free Stock Analysis Report

Middlesex Water Company (MSEX) : Free Stock Analysis Report

Artesian Resources Corporation (ARTNA) : Free Stock Analysis Report

Essential Utilities Inc. (WTRG) : Free Stock Analysis Report

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