SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (date of earliest event reported): June 29, 1998
CONSUMERS WATER COMPANY
(exact name of registrant as specified in charter)
MAINE 000-00493 01-0049450
(State or other (Commission File (IRS Employer
Jurisdiction of Number) Identification
Incorporation) No.)
THREE CANAL PLAZA, PORTLAND, ME 04101
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:(207)773-6438
(FORMER NAME OF FORMER ADDRESS, IF CHANGED, SINCE LAST REPORT)
ITEM 5 OTHER EVENTS.
On June 29, 1998 Consumers Water Company issued a press release to
report a definitive agreement providing for the merger of Consumers Water
Company with and into a newly-formed subsidiary of Philadelphia Suburban
Corporation. A copy of the press release is attached hereto as Exhibit 99.
ITEM 7 FINANCIAL STATEMENTS, PRO FROMA FINANCIAL INFORMATION
AND EXHIBITS
EXHIBITS: 99 - Press Release issued June 29, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSUMERS WATER COMPANY
(Registrant)
By: /s/ JOHN F. ISACKE
John F. Isacke
Senior Vice President and
JUNE 29, 1998 Chief Financial Officer
(Date)
PHILADELPHIA SUBURBAN CORPORATION TO MERGE
WITH CONSUMERS WATER COMPANY
Merger to Create Nation's Second Largest Investor-Owned Water Utility
in Consolidating Industry
Bryn Mawr, PA and Portland, ME, June 29, 1998 - PSC (NYSE; PSC), the
nation's third largest investor-owned water utility holding company, and
Consumers Water Company (NASDAQ: CONW) today announced that their respective
boards of directors have approved a definitive agreement for approximately
$270 million in a stock merger agreement, creating the second largest
investor-owned water utility in the U.S., serving over 1.6 million residents
in Pennsylvania, Ohio, Illinois, New Jersey and Maine.
Under the terms of the agreement, which includes a collar, Consumers'
shareholders will receive 1.459 share of PSC common stock for each
Consumers' share. The merger will be tax-free to shareholders of both
companies and will be accounted for as a pooling of interests. The merger,
which is subject to Hart-Scott-Rodino clearance, shareholder approvals,
state regulatory approvals and other customary conditions, is expected to
close before the end of the year.
This transaction represents a premium for Consumers' shareholders of
approximately 26 percent based on the closing prices of Consumers and PSC on
Friday, June 26. The transaction is expected to be accretive to PSC
earnings on an ongoing basis exclusive of one-time transaction costs. As a
result of the transaction PSC will assume debt of approximately $190
million.
Vivendi, a $33 billion French company and largest water company in the
world which owns 13 percent of PSC and 23 percent of Consumers, has stated
its intent to support the combination.
Noting that the U.S. water utility industry is in the very early
stages of consolidation with more than 50,000 separate water utility systems
nationally, PSC Chairman Nicholas DeBenedictis said: "This is a compelling
transaction for the shareholders of both companies as we will have a strong
balance sheet and a dynamic new platform for growth through acquisitions.
We also expect to achieve meaningful synergies, mainly through increased
purchasing leverage in such areas as electricity, chemicals and equipment."
Consumers Water President Peter L. Haynes said, "This transaction
makes eminent sense for our shareholders, giving them an immediate premium
for their shares plus the upside of participating in an early-stage
consolidation story. PSC has a strong management team and, especially with
its close relationship with Vivendi, will be in an excellent position to
accelerate growth and earnings."
Said Daniel Caille, Chairman of Generale des Eaux, the water division
of Vivendi (formerly Compagnie Generale des Eaux) "We are excited by the
combination of PSC and Consumers and believe this new enlarged entity will
be a meaningful participant in the consolidating U.S. water industry in
which we have been participating through PSC for the last 20 years."
DeBenedictis continued: "Over the next several years, we expect a wave
of consolidation in the water industry as the costs of meeting increasingly
stringent water standards rise. Small private or investor-owned water
systems - as well as many thousands of municipal systems facing budgetary
constraints and considering privatization - are increasingly turning to
professional operators such as ourselves. We expect the combined company to
be an aggressive acquirer of attractive assets. And, through our
relationship with Vivendi, the largest water company in the world, we will
also be well positioned to support Vivendi on privatized services and
management contracts." He added that, eventually, the Company's increased
size could also give it the mass needed to market other utility services in
conjunction with gas and electric companies.
"Consumers Water has a 70 year tradition of quality service in the
industry and has recently focused their strategy on growth in the water
utility industry. We are looking forward to joining with the professionals
at Consumers to make this merger a win-win," said DeBenedictis.
Since 1992, PSC has pursued a growth-through-acquisition strategy that
has resulted in more than 25 water company acquisitions and two wastewater
system acquisitions. "With our corporate strategy focused on growth and
today's announcement, we have stepped up the pace dramatically," said
DeBenedictis who will continue as PSC chairman and CEO.
Under the agreement, Consumers will become a wholly owned subsidiary
of PSC, the parent company of Philadelphia Suburban Water Company (PSW).
Current PSC management will continue to manage their existing operation and
overall corporate activities while the Consumers' state subsidiaries will
continue to be managed by the current subsidiary presidents.
Caille added that Vivendi, through its U.S. subsidiary Air & Water
Technology - the country's largest contractor for the privatization of water
and wastewater services - "is interested in the development of a close
relationship between PSC and Air & Water Technology and plans to work with
PSC on privatization projects in the five states in which we will operate
after the merger closes." Vivendi also sees the benefit of using PSC's
cost-effective services such as laboratory, customer service and billing
activities and joint purchasing opportunities as supportive of our expanding
U.S. privatization and operations and management contracts.
Salomon Smith Barney served as financial advisor to PSC, and SG Barr
Devlin served as financial advisor to Consumers Water.
Consumers Water owns seven water utilities with operating subsidiaries
located in Ohio, Illinois, Pennsylvania, New Jersey, and Maine. The company
serves approximately 670,000 residents in a five-state area.
PSC is currently the third-largest, investor-owned water utility in
the country, serving approximately one million residents in 97
municipalities in Delaware, Montgomery, Chester, Bucks and Berks Counties in
Pennsylvania.
