California Water Service Group
CWT
announced that its subsidiary, New Mexico Water Service has entered into an agreement to acquire Animas Valley Land and Water Co. This acquisition, on completion, will add 2,000 new customer connections to California Water Service’s customer base in northwest New Mexico. Subject to timely approval, this acquisition is expected to close in early 2021.
New Mexico Water Service currently serves about 16,000 people through 8,200 water and wastewater service connections in New Mexico.
Consolidation Necessary in Water Space
The role of consolidation is extremely vital in the water utility space, as it is extremely difficult for small service providers to invest a large sum to upgrade and repair old water mains. As it is, 50,000 water and 15,000 wastewater operators are currently providing services in the United States. Some of these operators are not large enough to accommodate the infrastructure upgrade expenses.
Hence, large water utilities are actively acquiring small water and wastewater service units, as well as ensuring investments to upgrade the quality of services. California Water Service is also expanding operations by making strategic acquisitions. In June 2020, it acquired Rainier View Water Company and in September 2020, its subsidiary Hawaii Water Service received approval to acquire Kalaeloa Water Company from Hunt Companies.
In addition to California Water Service, other water utilities like American Water Works Company
AWK
, Global Water Resources, Inc.
GWRS
and Essential Utilities
WTRG
, among others, are making strategic acquisitions and expanding their footprint.
Big water companies are ensuring fresh investments, and upgrading the quality of water as well as wastewater services of the companies acquired by them. Customers are also benefiting from the acquisitions as they receive high-quality and reliable services.
Price Performance
Shares of California Water Service Water have underperformed the
industry
in the past 12 months.
Zacks Rank
Currently, the company has a Zacks Rank #5 (Strong Sell).
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