Energy company ALLETE announced on Friday that it has entered into a stock purchase agreement with Japanese water management company Kurita Water Industries Ltd to divest itself of US Water Services Inc. Kurita will pay US$270mn for US Water Services, with the transaction expected to close in Q1 2019.
US Water Services is based in St. Michael, Minnesota and provides integrated water management solutions to approximately 5,000 customers, helping to optimize system performance, reduce water and energy use, and improve efficiency. ALLETE acquired the company in 2015, overseeing its growth into a world-class industrial water service provider in North America through an aggressive expansion in geography, end markets and service offerings.
“This sale exemplifies our disciplined approach to providing shareholder value while executing on our multifaceted strategy,” said ALLETE Chief Financial Officer Bob Adams. “Our go-forward business mix provides attractive opportunities to meet and potentially exceed our stated average annual earnings growth target of five to seven percent while supporting our strong credit ratings. Indeed, proceeds from the sale will be primarily reinvested in growth initiatives at both our Regulated Operations and ALLETE Clean Energy, reducing the need for equity issuances that may otherwise arise. In addition, we will consider using a portion of the proceeds to implement a common stock repurchase program.”
“We at U.S. Water Services are grateful for the opportunities provided by ALLETE and look forward to working closely with Kurita’s team to further enhance the services and integrated offerings we provide to our customers, while expanding our U.S. market reach,” said U.S. Water Services CEO LaMarr Barnes.