8-KMaterial AgreementsRegulation FDExhibits & Filings

American Water Works Company, Inc. 8-K Report, Material Agreement (Apr 11, 2018)

Filed April 11, 2018For Securities:AWK

Summary

American Water Works Company, Inc. (AWK), through its wholly owned subsidiary American Water Enterprises, LLC (AWE), announced on April 11, 2018, the execution of a Stock Purchase Agreement to acquire Pivotal Home Solutions from Southern Company Gas for approximately $365 million in cash. This strategic acquisition significantly expands AWK's existing Homeowner Services Group, adding approximately 1.2 million customer contracts to its current 1.8 million. The deal is expected to close in the second quarter of 2018, subject to customary closing conditions, including antitrust review under the HSR Act. This acquisition represents a material expansion of AWK's non-regulated Homeowner Services segment, enhancing its scale and reach in the home warranty and protection market. Investors should monitor the successful integration of Pivotal Home Solutions and the financial contribution it will make to American Water's overall revenue and profitability. The transaction is not subject to any financing condition, indicating AWK's strong financial position to fund the acquisition.

Key Highlights

  • 1AWK subsidiary to acquire Pivotal Home Solutions for $365 million cash.
  • 2Pivotal Home Solutions provides home warranty protection products and services.
  • 3Acquisition adds approximately 1.2 million customer contracts to AWK's Homeowner Services Group.
  • 4Transaction expected to close in the second quarter of 2018.
  • 5Deal is subject to regulatory approvals, including HSR Act review.
  • 6Acquisition is not contingent on financing.
  • 7American Water Works Company, Inc. has provided a guarantee for its subsidiary's obligations.

Frequently Asked Questions

The acquisition of Pivotal Home Solutions is a strategic move to significantly expand American Water's Homeowner Services Group. By adding approximately 1.2 million customer contracts, AWK enhances its scale and market presence in the home warranty protection sector, complementing its existing 1.8 million customer contracts.

The acquisition is for approximately $365 million in cash. While specific financial projections are not detailed in this 8-K, investors should anticipate an increase in revenue and potential synergies from the expanded customer base and service offerings of the Homeowner Services Group. The deal is not subject to a financing condition, indicating AWK's ability to fund the acquisition.

The closing of the acquisition is subject to several conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act, obtaining necessary governmental consents and approvals, the accuracy of parties' representations and warranties, the absence of any Material Adverse Effect, and compliance with covenants. The transaction is expected to close in the second quarter of 2018.

Southern Company Gas, through its subsidiary Nicor Energy Ventures Company, is the seller of Pivotal Home Solutions. Southern Company Gas has also entered into the Purchase Agreement for limited purposes related to certain tax matters and post-closing restrictive covenants.