SouthWest Water Co. said Wednesday that it has entered into an agreement to be acquired and taken private for about $275 million in cash, plus assumption of debt.
The Los Angeles company, which provides water production and wastewater treatment services, said it would be bought for $11 per share by a partnership between Water Asset Management LLC. and J.P. Morgan Asset Management. Both entities made the investment on behalf of their institutional investors.
The $11 per share offer represents a premium of 56 percent to the company’s closing price on Tuesday. The deal, which includes the company’s outstanding debt, is valued at $427 million. The new owners also plan additional investment to upgrade the company’s water service infrastructure.
“The partnership is extremely committed to our industry and its infrastructure needs, as well as the stability of the company’s operations, quality customer service and community involvement,” said Chief Executive Mark Swatek in a press release.
Wells Fargo Securities LLC acted as financial advisor to SouthWest’s special board committee in exploring strategic alternatives the last few months.
Shares were up $3.40, or 48 percent, to $10.47 in midday trading on the Nasdaq.
Southwest Water, headquartered downtown, owns and operates 130 regulated water and wastewater systems that serve about 160,000 customers in five states including California. It also has a division that contracts to help operate 600 utilities in nine states including California.
