US largest water and wastewater utility American Water Works has signed an agreement to acquire Pivotal Home Solutions from energy provider Southern Gas Company.
American Water Works will acquire the home warranty business for a total of $365 million in cash.
Pivotal Home Solutions operates in 18 states with about 1.2 million customer contracts. The company offers services including home appliances, heating and cooling systems, and lines in and around a home.
Deborah Degillio, president of American Water Enterprises, said: “This acquisition delivers on one of our growth strategies to expand our complementary businesses. Coupled with our existing Homeowner Services portfolio, this acquisition will enhance our ability to provide additional home warranty solutions across the US, nearly doubling our customer contracts.
“This acquisition also creates a tremendous opportunity from a product line perspective and for cross-selling our core water and wastewater products.”
Susan Story, CEO at American Water, added: “The employees of Pivotal Home Solutions, like those in American Water’s HOS group, are focused on providing outstanding customer service, as evidenced by both of our organisations achieving the Better Business Bureau’s highest rating.
“Additionally, this is an opportunistic transaction for American Water as it provides a strong platform for long-term and capital-light organic growth.”
The acquisition awaits regulatory approvals. If parties secure a regulatory green light, Pivotal Home Solutions will be a subsidiary of American Water, but will continue operating under its current name and maintain its operations in Naperville.
The transaction is expected to be closed before the end of the second quarter of 2018.
American Water provides services to consumers in 43 states and has over than 1.8 million contracts. It has operated for the past 15 years, has a 97% customer satisfaction rating and provides services in partnership with municipalities including the New York City Department of Environmental Protection, Orlando Utilities Commission and Nashville Metro Water Services.