d_teller

American Water Works Springs a Leak

RWE, a really giant utility holding company (see RWEOY on pink sheets for company info) sold off its water holdings after waiting 18 mos. for financials to stabilize in Europe...where it competes with Suez (see SZEZY) and after Suez's merger with Gaz d'France, I guess the majority holders (the CEO and senior officers of RWE) decided the time had come to bank 81 million dollars. They don't want to hold "regulated utilities" in the U.S., and the Suez delisting of its ADR's should give pause to purchasers - of the inability of those conglomerates to comply with Sarbanes-Oxley and be "transparent".
It should come as no surprise that "goodwill" and other ephemerals were part of the water holding's valuation.

American Water Works IPO Analysis: Just an Exit Strategy for Parent Company RWE

Posting above is most accurate...I sold RWE about a year ago, when they decided to hold up the spin-off of the water subsidiary, and after the debt loading was revealed. Ditto for Suez, which is getting out of the water treatment business in its merger with Gazd'France, leaving Veolia and GE as the last large-cap conglomerates with water processing as a major component.

Most of the water utilities pay small or no dividends, are heavily regulated and subject to "hind-teat" funding for repair and maintenance of production and distribution. The water infrastructure in the Developed Economies can't get sufficient funding until "BOIL WATER" notices are sent...and some of the companies that specialize in parts, Gorman-Rupp, Lindsay, Insituform, etc., have had high speculative P/E increases, but their sales and contracts aren't like those of tankers and bulk shippers.

When clean water and waste services are treated like economic commodities, then market values may be fairly established. Until then, and I may not live that long, the situation wherein a large conglomerate, such as WRE, tries to peddle a debt-laden water service, will probably continue.