ALLETE to acquire 87% of U.S. Water Services

ALLETE has entered into a strategic partnership with U.S. Water Services, an integrated water management company, to acquire 87 percent of the company for $168 million.

The purchase initially will be based on a total implied enterprise value of $194 million.

The employees and management of U.S. Water will continue to own the remaining 13 percent, which ALLETE will purchase later for a contingent amount based on U.S. Water’s future income.

Through this acquisition, ALLETE expects to achieve long-term earnings growth and diversity without any material impact on 2015 earnings per share.

Besides, the company’s previously stated 2015 earnings guidance will remain unchanged with excluded transaction costs.

U.S. Water generated revenue of around $120 million during 2014, and ALLETE aims future revenue growth of 10 percent to 15 percent annually.

The transaction will be financed with a combination of cash, equity raised from existing programs and temporary short-term debt.

Financial advisory services for this transaction were provided by Piper Jaffray and J. P. Morgan.

U.S. Water serves a growing and diverse mix of over 3,600 industrial customers, including a significant number of Fortune 500 companies.

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The acquisition of U.S. Water is consistent with ALLETE’s strategy of investing in energy infrastructure to complement its central regulated utility, providing long-term earnings growth.

U.S. Water’s management team will remain in place and the headquarters will be at St. Michael, Minnesota only.

ALLETE Clean Energy has a growing portfolio of wind generating facilities, and U.S. Water provides integrated water management to a growing base of industrial and commercial customers.

In Oct 2014, U.S. Water launched the first in what will be a series of products developed for the biofuels industry specific to corn oil recovery.

COR NS is a new, non-sorbitol based product line developed by U.S. Water’s Ethanol Process Technologies team to aid in the extraction of corn oil as a co-product for biofuel plants.

Sabeena Wahid
[email protected]