Pennichuck Corp (NASDAQ: PNNW), a holding company involved in the supply and distribution of potable water in New Hampshire, said Friday it has agreed to be bought by the state's City of Nashua in a $200 million deal.
Under the terms of the deal, Nashua will acquire all of the company's stock for $29.0 per share, representing a 19% premium to Pennichuck's closing price yesterday of $24.40. The company has gone up more than 14% on Friday, trading at $27.8 as of 10:19am EST.
The deal resolves the company's legal domain dispute with the City, in which the City has been attempting to take the operating assets of Pennichuck's regulated utility subsidiary, Pennichuck Water Works, by condemnation - a term used to describe the process by which the government can seize private property without owner's consent for the purposes of public or civic use.
"This stock sale will enable our shareholders to avoid double-taxation and the City will acquire more assets at a lower total cost than would apply in a condemnation taking," said Pennichuck president and CEO Duane C. Montopoli.
The acquisition, however, is still subject to the approval of New Hampshire's board of Aldermen, Pennichuck's shareholders, and the New Hampshire Public Utilities Commission (NHPUC). The NHPUC review process is expected to last until the second half of 2011, said Pennichuck.
Pennichuck supplies and distributes water in the state through its three regulated water utilities. Its non-regulated, water-related activities include operations and maintenance contracts with municipalities and private entities in New Hampshire and Massachusetts.
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