RWE to Acquire American Water Works in $4.6 Billion Cash Transaction

Sept. 18, 2001
Compelling Combination of Companies to Produce Powerful New Force in World Water Marketplace
American Water Works Company, Inc

American Water Works Company, Inc., the largest publicly traded water services company in the United States, and RWE AG, a leading international provider of electricity, gas, water and wastewater management services, have entered into a definitive agreement under which RWE will purchase all the outstanding shares of American Water at a price of $46 per share in cash.


RWE's all-cash proposal represents a premium of 36.5% to the average closing price of American Water shares over the 30 trading days ended September 10, 2001, and a 29.5% premium above the all-time high closing price of $35.52. The proposed transaction has a total value of approximately US$7.6 billion, including the assumption of approximately $3.0 billion in debt American Water had outstanding as of June 30, 2001.


Upon completion of the transaction, American Water will be combined with the U.S. operations of Thames Water, RWE's London-based international water services business. American Water will manage the joint operations in North and South America. American Water's CEO, Jim Barr, will report directly to Bill Alexander, CEO of Thames Water.


The transaction is expected to take more than a year to complete, following approval by American Water's shareholders and appropriate state regulatory agencies. It is expected to have no effect on the Company's previously announced plans to acquire Azurix North America as well as the water and wastewater assets of Citizens Communications, or to sell its Salisbury, MA operations and divest its New England operations to Aquarion.


Commenting on the transaction, Dr. Dietmar Kuhnt, President and Chief Executive Officer of RWE, stated: "We are extremely pleased to have reached this agreement with American Water Works, the largest and most geographically diversified water services company in the US. In addition to providing us with a top position in the U.S., the acquisition of American Water will further establish RWE as a global leader in the provision of water services. The development of RWE's world-class water business, in turn, will provide greater balance to our core utility portfolio and allow us to deliver enhanced growth and shareholder value."


Bill Alexander, Chief Executive Officer of Thames Water, said, "American Water provides RWE and Thames Water with a highly respected management team and a strong platform for developing our water business in North, Central and South America, which are among the world's largest and fastest-growing markets. Together, we will strengthen our ability to serve the interests of our customers and employees. RWE and Thames, like American Water, are strongly committed to preserving the environment, participating in local activities, and otherwise adding value to the communities in which we operate."


On behalf of the American Water Works Board of Directors, Chairman Marilyn Ware commented that, "our professional heritage and expertise are consistent with those of RWE and Thames Water. This transaction pairs us with strong international partners and positions us perfectly to continue the momentum we've created toward becoming the water resources manager of choice in the U.S."


American Water Works President and Chief Executive Officer J. James Barr, who will lead the integrated water services operations for the Americas, described the transaction "a compelling combination of companies that will create a powerful new force in the world water market and deliver value for our customers, our shareholders, our associates, and the communities we serve.


Over the years, through multiple consolidations, we have been able to enhance our ability to address water resource issues throughout the U.S. Joining forces with Thames Water and RWE is the next logical step in a growth strategy based on the delivery of vital community services," Barr said.

Source: American Water Works Company