Aqua America's Unit Completes Acquisitions - Analyst Blog

Aqua America Inc. WTR continues with its systematic inorganic growth strategy to expand operations. The company's Virginia subsidiary announced that it has completed three different acquisitions - four water systems and one wastewater system.

Aqua America paid $150,000 to Presidential Service Company to acquire the latter's water system assets. In addition, the company purchased a wastewater system asset from Presidential Service Company. This acquisition will enable the company to enter into King George County, Va.

In another transaction, Aqua America acquired the water system assets of the Stagecoach Hills public water system for $25,000.

Lastly, the company invested $82,500 to purchase two water systems from the Botetourt Forest Water Corporation.

Further, Aqua America intends to invest a total of roughly $215,000 to upgrade acquired water infrastructure in King George and Stagecoach Hills subdivisions, Va. The company also plans to spend around $1.4 million to construct a new wastewater treatment plant to improservice in King George, Va.

Since 2003, the company invested over $70 million in Virginia to improve and reconstruct water and wastewater infrastructure.

Aqua America's acquisition strategy involves buying up assets, which have similar line of business. This kind of acquisition strategy is expected to be instantly accretive. The aforesaid acquisitions will enable the company to add around 1,480 people to its portfolio.

We note that Aqua America is strengthening its presence in the state of Virginia, primarily through inorganic way. In Dec 2013, the company's Virginia subsidiary acquired the water system properties of the St. Tammany Landing Property Owners Association, Inc. for $28,000. Inclusion of these properties will help the company to reap benefits from its existing operations in the region and ease competition.

Aqua America's steady acquisition and improvement of the existing infrastructure will enable the company to provide reliable services to its customers, while maintaining government mandates.

Aqua America currently has a Zacks Rank #3 (Hold). However, some better-ranked stocks in the same industry include American States Water Company AWR, Middlesex Water Company MSEX and Connecticut Water Service Inc. CTWS. While American States Water and Middlesex Water hold a Zacks Rank #1 (Strong Buy), Connecticut Water Service carries a Zacks Rank #2 (Buy).