RWE to spin off American Water

As hinted at in a Feb. 23 Reuters interview of its chief financial officer, the executive board of RWE AG, parent company to American Water, will pursue an initial public offering for shares of the U.S.-based water company as the most attractive option for RWE, American Water, its employees and customers. The German conglomerate bought the largest U.S. water and wastewater services provider for $7.5 billion in 2001. This decision will return it to its status as a publicly-traded firm by 2007...

VOORHEES, NJ, March 24, 2006 (BUSINESS WIRE) -- As hinted at in a Feb. 23 interview by Reuters of its chief financial officer, the executive board of RWE AG, parent company to American Water, decided to pursue an initial public offering (IPO) in the U.S. for the shares of American Water as the most attractive option for RWE and the U.S.-based company, its employees and customers. This decision will return American Water to its status as a publicly-traded company.

The IPO will result in a publicly-traded company that's focused on water and wastewater in the U.S. and dedicated to maintaining a high level of service and quality.

The sales process is expected to be initiated shortly through filings for approval with certain state public utility commissions. The IPO will require filing of a registration statement with the U.S. Securities and Exchange Commission (SEC). The transaction will also be subject to the approval of the RWE AG Supervisory Board. The target is to complete the transaction during 2007.

RWE AG, Europe's third-largest utility, bought American Water for $7.5 billion in 2001. RWE's stock has lagged behind that of competitor E.ON AG in the past five years as it pursued a five-year, $17 billion expansion that drew investments away from growing energy markets. Returning its focus to European power markets, RWE in November announced plans to divest both American Water and U.K. water business Thames Water. At the time, it said American Water would be sold either through an IPO or to a group of financial investors.

Meanwhile, London's Sunday Times reported March 12 that Cheung Kong Infrastructure Holdings (CKI), which is majority-owned by Hutchison Whampoa, the Hong Kong-based conglomerate, was considering a GBP 8 billion potential offer for Thames Water, which RWE acquired fully in January 2003 (although its controlling interest dates to late 2000).

RWE (www.rwe.com) is one of the leading international utility companies. The company provides customers with electricity, gas and water as well as services related to these products. The company's core markets are Germany, the UK and Continental Europe. Major companies and millions of households throughout Europe rely every day on the RWE Group's services and products. In fiscal year 2005, approximately 86,000 employees worldwide within the RWE Group generated sales of about EUR 42 billion.

American Water (www.amwater.com), with headquarters in Voorhees, NJ, is the largest and most geographically diversified provider of water services in North America. The company has regulated and non-regulated utility businesses located across 29 states and three Canadian provinces. In fiscal 2005, 6,850 American Water employees generated over $2.2 billion in revenues. The company also serves over 18 million people with clean drinking water and wastewater services.

Also see:
-- "RWE to Sell Shares of American Water Works by End of Next Year" (Bloomberg)
-- "RWE plans to list American Water unit in US" (Forbes)
-- "RWE IPO In US Would Extract More Value" (NewRatings)
-- "UPDATE 2-RWE plans IPO for American Water unit" (Reuters)

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