Essential Utilities Inc. has successfully completed the acquisition of Peoples, a Pittsburgh-based natural gas distribution company, in an all-cash transaction that reflects an enterprise value of $4.275 billion, including the assumption of approximately $1.1 billion of debt.
As previously disclosed, the transaction was financed through an appropriate mix of equity and debt, which supports a strong balance sheet and continued investment-grade credit ratings for the combined business. Essential, which changed its name from Aqua America on Feb. 3, began trading under the NYSE ticker symbol (WTRG) the same day.
The acquisition received regulatory approval from the Pennsylvania Public Utility Commission on Jan. 16 and marks the creation of a new infrastructure company uniquely positioned to have a significant impact on improving infrastructure reliability, quality of life, and economic prosperity in the areas it serves.
In connection with the completion of Essential’s acquisition of Peoples, Essential also closed the previously announced $750 million investment from the Canada Pension Plan Investment Board (CPP Investments). CPP Investments acquired approximately 21.7 million shares of Essential’s common stock through the transaction.
“Today marks the beginning of an exciting new chapter in our combined companies’ histories,” said Essential Chairman and CEO Christopher Franklin. “Together, we are poised to play an important role in solving our nation’s water and natural gas infrastructure challenges through thoughtful capital investment, operational excellence, environmental stewardship, and a commitment to strengthening local communities. The closing of the transaction is good news for Aqua and Peoples customers, who will benefit from our more than 260 years of combined expertise and service.”
As part of the regulatory approval for the Peoples transaction, Essential committed to $23 million in rate credits for customers. Pennsylvania customers of both Aqua Pennsylvania and Peoples will receive a one-time rate credit on their bill in 2020. Beyond this positive impact, there will be no other impact to customer bills at either utility as a result of the transaction.
Essential has committed to no job loss at its utilities as a result of the combination. Its officials are already in discussion to add employees both internally and through contractors as gas main replacement is accelerated in the Pittsburgh region. The combined company plans to replace nearly 3,000 miles of aged natural gas mains over approximately 15 years.