Utilities Mergers and Acquistions Talk - Aquila Sells 4 Business Units (ILA)

 |  Includes: EDE, ILA, WPS
by: Sandy Cohen

Aquila Inc. (ILA) announced the sale of 4 operating subsidiaries as a part of its ongoing restructuring efforts, writes utility analyst Sandy Cohen. Though unrelated to the recent Energy Bill and its repeal of PUHCA, this continues a flow of Utility Industry M&A deals around the country.

ILA sold the 4 business units for a total of just under $900 million, and will use the proceeds to reduce its liabilities, including its debt burden. One electric utility business unit was sold to an existing Electric Coop. Two gas utility business units (resulting in $568 million of proceeds) were sold to WPS Resources (NYSEARCA:WPS). And Empire District Electric (NYSE:EDE) bought the 4th gas utility business unit.

See the following link for more details: Kansas City Business Journal Article on ILA's Transaction.

Aquila has been under huge financial pressure for several years, and this move was part of an ongoing effort to restructure the company, and reduce rather substantial remaining financial liabilities. ILA was one of those previously high-flying utilities that attempted to ride the wave of deregulated power markets, only to be swept under the crash of many such stocks. ILA had reached a high off $36/share in April 2001, and traded as high as $25/share in the Spring of 2002. But by November of 2002, just 6 months later, was trading below $2/share. Since November 2002, ILA has mostly traded between $2 and $4 per share, where it trades right now.

« Any opinions expressed on the Seeking Alpha sites are those of the individual authors and do not necessarily represent the opinion of SeekingAlpha or its management. »