U.S. Water News Online
BERLIN -- German utility RWE AG has postponed a planned
initial public offering of its U.S.-based water unit, citing
"unfavorable conditions" in U.S. markets.
RWE had planned to spin off American Water Works Co., based in
Voorhees, N.J., through an IPO at the end of this year as it moves to
sharpen its focus on European gas and electricity markets.
In August, when American Water Works filed for an initial public
offering of its common stock, it did not disclose the expected number
or price range of shares to be offered, but indicated the maximum
offering price could total $1.5 billion.
However, RWE said it was postponing the plan following recent
"In light of the currently unfavorable conditions in the U.S.
capital market, RWE does not expect that it can achieve an adequate
value for American Water at present," the Essen-based company said in
a brief statement.
It did not specify what it would consider an adequate value.
The company said that, as a result of the decision, the conditions
no longer exist for a dividend hike or sharebuyback this year. Both
were linked to the American Water plans.
Chief Financial Officer Rolf Pohlig told reporters during a
conference call that RWE still intends to sell the unit through an
IPO but has yet to decide on a new timeframe. He added that RWE is
not considering selling American Water to an investor.
RWE, Germany's second-largest utility by market value, also said
its third-quarter net profit declined 54 percent to 198 million euros
($289 million) from 433 million euros a year ago.
The company said the figure was weighed down by a 256 million euro
($373 million) charge on deferred taxes related to a reform of German
RWE said third-quarter revenue was 8.6 billion euros ($12.5
billion) -- down from 8.81 billion euros a year earlier.
Over the first nine months of the year, the company's net profit
rose by 35 percent to 2.83 billion euros ($4.1 billion) from last
year's 2.09 billion euros, helped by high power prices in Europe.
Analysts surveyed by Dow Jones Newswires had predicted slightly
higher earnings of 2.9 billion euros ($4.2 billion).
RWE reiterated its outlook for the full year, saying it still
expects operating profit to grow by 10 to 15 percent.
RWE shares were down sharply on news of the postponed IPO, off 6
percent to 88.67 euros ($129.29) in Frankfurt.
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