American Water Works Company Announces Largest Water Utility Acquisition in U.S.

VOORHEES, N.J.--(BUSINESS WIRE)--Oct. 13, 1998--American Water Works Company Inc. (NYSE:AWK) President and CEO J. James Barr announced Tuesday that an agreement in principle has been reached to acquire National Enterprises Inc. (NEI).

Subsidiaries of NEI, a privately owned company, provide water service to more than 1.7 million people in Missouri, Illinois, Indiana and New York.

"This transaction, valued at $700 million, represents another important step toward industry consolidation and will be the largest water utility combination ever accomplished in the United States," Barr said.

The acquisition is anticipated to become accretive to American Water Works Company within 12-18 months. The transaction, which will be accounted for as a pooling of interests, will be accomplished through a tax free exchange of 14,937,000 shares of American Water Works Company stock valued at $475 million, for all of the outstanding shares of NEI.

It is anticipated that the transaction will be completed in 1999, following regulatory approvals, termination of the waiting period under Federal anti-trust laws and completion of other requirements.

"This acquisition," continued Barr, "will enhance our geographic diversity and complements perfectly our current water utility business. The water utilities we are acquiring in this transaction have a long, established record of providing high quality water service.

"Their professional and technical talent will blend together extremely well with our existing professional resources. Because we already serve areas in the same four states as NEI subsidiaries, we expect significant added efficiencies from the ability to combine these operations."

NEI is the parent company of Continental Water Company, which in turn owns: St. Louis County Water Company serving suburban St. Louis, Mo.; Northwest Indiana Water Company serving Gary, Hobart and surrounding areas; Northern Illinois Water Company serving Champaign, Urbana and surrounding areas; and Long Island Water Corp. serving the southwest portion of Nassau County on Long Island, N.Y.

NEI also has investments in the telecommunications industry.

All of the common stock of NEI is currently owned by descendants of the Charles Stewart Mott family. Upon completion of this transaction, the Mott family will hold approximately 16% of the outstanding shares of American Water Works common stock.

It is expected that two representatives of the Mott family will be elected to the Board of American.

Marilyn Ware Lewis, Chairman of the Board of American Water Works, commenting on the acquisition, said "We have known of, and admired, the Mott family's leadership in the water utility industry for many years.

"Their commitment to this business is fully compatible with our own. We are excited by the prospects for long-term growth in shareholder value resulting from the combined strengths of these two fine organizations."

American Water Works Company is the largest and most geographically diverse investor-owned water utility business in the U.S. The Company, through its 23 utility subsidiaries, serves more than 7 million people in over 870 communities in 22 states.