Corporate Law Blog

Utility company acquires assets to expand customer base

American Water Works, a company that has operations in a large number of states, has now made a deal to acquire the water and wastewater assets of Millersburg, Kentucky. Up to this point American Water has only had a small presence in our state.

The company has been strategically acquiring assets in an effort to enhance its customer base. This new acquisition is said to expand the number of its customers by around 800. Previous acquisitions by the company have also allowed it to expand concerning its core offerings. It hopes to upgrade its infrastructure while continuing with acquisitions in an effort to allow it to deliver better servicing for its customers.

The business strategies of this company appear to have brought it success. As of this spring it had a cash balance of $30.8 million and $1.2 billion in available funding. Cash flow during the first quarter of 2014 increased substantially from the same period last year.

It's common for utility companies to make these acquisitions and business deals to allow for a stronger presence. Mergers and acquisitions are particularly complex legal transactions due to the number of regulatory concerns. There are a number of considerations that need to be made when these acquisitions are made including compliance with government regulations. It must be remembered that every state such a business has a presence in will have its own set of rules and regulations. As mundane as these considerations may seem, non-compliance can prove costly.

Guidance through such transactions frequently requires the guidance of experienced business attorneys who have dealt with large corporate transactions in the past and have a deep understanding of the needs of the business.

Source: NASDAQ, "American Water Unit to Acquire Kentucky Assets - Analyst Blog," May 22, 2014