-Caveat Lector-
Report: Germany's RWE weighs
$3.6 billion bid for American Water
Utility eyes deals in U.S. and Europe, source says
FRANKFURT, Germany, Aug. 27 - Germany's RWE AG is considering
acquisitions in Europe and North America to expand its core
businesses, an industry source said on Monday, amid increasing
speculation it will acquire a U.S. water company.
American Water Works Company, Inc. (AWK)
price change
$34.00 +1.26
"THE COMPANY is looking at various options all over Europe
and the U.S.," an industry source told Reuters.
The company, Germany's second-biggest utility by market
capitalization after E.ON, has made clear it wants to expand in its
four key business areas - electricity, water, gas and waste
management services.
RWE declined to comment on a report in the Financial Times
on Monday that it was considering a $3.6 billion bid for American
Water Works, the largest regulated water business in the U.S.
"Our company policy is not to comment on market speculation
and rumors," RWE press spokesman Bill McAndrews told Reuters.
According to the report, senior management representatives
traveled to American Water's office in New Jersey in the past two
weeks to negotiate a deal.
WATER SPECULATION HEATS UP
On Friday, the Wall Street Journal reported that the
Essen-based group was poised to buy water supplier Azurix, a unit
of U.S. energy trader Enron. The company also declined to comment
on that report.
"The American Water buy would make complete strategic
sense in terms of building onto Thames Water," said one
Frankfurt-based analyst at an international investment bank.
RWE acquired Thames Water last year as part of a drive to
expand abroad to offset weakness in its electricity business in
Germany following the liberalization of the power market and has
indicated it wants to build up its operations in the sector.
It is currently the world's third biggest water company
behind French rivals Suez Lyonnaise and Vivendi.
The analyst said American Water was more likely to be a
target for RWE than Azurix, which has divested its U.S. water
operations and now has water assets only in Latin America.
"The market cap of American Water is around $3.2 billion, so
the $3.6 billion price named (by the FT) seems reasonable," he
added.
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