The Avon Water Co. and Connecticut Water Service Inc. have reached an agreement to join forces, in a deal expected to close in April 2017, the firms announced Wednesday.
Connecticut Water is a parent holding company based in Clinton and conducts its regulated water operations in Connecticut and Maine through its operating subsidiaries, The Connecticut Water Co. and The Maine Water Co.
Avon Water serves about 4,800 customers in the Farmington Valley communities of Avon, Farmington and Simsbury, and is located near Connecticut Water’s existing operations in Avon and Farmington.
The agreement provides for the payment of stock consideration valued at approximately $26.2 million and a cash payment of $6.2 million for a total payment to shareholders of $32.4 million. Holders of Avon Water Co. common stock will receive 80 percent of the transaction consideration in the form of shares of CTWS common stock in a tax-free exchange.
The transaction reflects a total enterprise value of approximately $36.6 million, with the $32.4 million paid to shareholders and the assumption by Connecticut Water of approximately $4.2 million in long-term debt of Avon Water Co.
The deal requires approval by shareholders and regulators in Connecticut and Maine. The parties plan to file applications with both states in the fourth quarter of 2016 with an anticipated closing by April 2017.
Avon Water would maintain its separate corporate existence and name.
The transaction will not affect the rates or service for any water company customers.
Less than six months ago, on May 10, CTWS also announced that it had reached an agreement to purchase the Heritage Village Water Co., which serves 4,700 water and 3,000 wastewater customers in the communities of Middlebury, Oxford and Southbury. A final Connecticut decision on that acquisition is expected in early December with an anticipated closing by the end of the year.
The combined company will serve more than 132,000 water customers, or more than 450,000 people in 80 communities across Connecticut and Maine, in addition to more than 3,000 wastewater customers in Southbury.
