PSC to Acquire New Hampshire Water Utility

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PSC

Adds Seventh State to Nation's Second Largest Water Utility

PSC, the nation's second largest investor-owned water utility holding company, and Pennichuck Corporation the largest investor-owned water utility in New Hampshire, have entered a definitive agreement to merge in a stock transaction that, including the assumption of $27 million of debt, has a total enterprise value of approximately $106 million and represents $33.00 per Pennichuck share based on a PSC share price of $23.00 to $25.00.

The transaction is expected to be accretive to PSC earnings on an ongoing basis exclusive of one-time transaction costs.

The merger will create a combined company with 630,000 customer accounts serving more than two million residents in seven states (New Hampshire, Maine, Pennsylvania, New Jersey, Ohio, Illinois, and North Carolina) and increase PSC's customer base by five percent.

The merger is expected to close before the end of the year. The transaction represents a premium for Pennichuck shareholders of over 20 percent based on the closing prices of Pennichuck and PSC common stock on Friday.

Noting that there are only a few U.S. based investor-owned water utilities remaining as a result of rapid consolidation in the industry over the past five years, PSC Chairman Nicholas DeBenedictis said, "This transaction represents the launching of another growth platform for PSC. Our already-successful growth-through-acquisition strategy continues to enhance shareholder value. For Pennichuck, the transaction represents opportunities to leverage the technical, water quality and purchasing strengths of a much larger company while continuing to deliver the same excellent service that customers currently enjoy."

Pennichuck's Chief Executive Officer Maurice L. Arel said, "This transaction makes a great deal of sense for the Pennichuck shareholders, giving them an immediate premium for their shares while maintaining substantially the same dividend rate and the added benefit of greater liquidity. Additionally, we will have the benefit of joining a much larger company (20 times our size) that has experienced an annual growth in shareholder value of 22.5 percent over the past five years. PSC has a strong management team and with the Pennichuck addition, looks forward to continued growth and increased earnings."

Arel will become a director of PSC upon closing of the merger. He intends to retire from Pennichuck as of the end of this year. Arel's replacement as the new CEO of Pennichuck is expected to be chosen from the company's local executive management team.

SG Barr Devlin served as financial advisor to Pennichuck Water Company. Pennichuck currently serves approximately 30,000 customers (120,000 residents) in 23 communities throughout southern New Hampshire.

PSC is currently the second largest, investor owned water utility in the country, serving approximately two million residents in six states: Pennsylvania, Ohio, Illinois, New Jersey, North Carolina and Maine.

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