PF Archive

Water: Made In Europe

01 12 1999

With a price tag of £367.9 million ($588.64 million) plus £206.7 million of debt, Thames Water's acquisition of the E'Town water utility in New Jersey, isn't cheap ? but it is strategic. The deal marks the next stage of Thames Water's carefully planned expansion into the US water sector, a market in which operation and management (O&M) contracts are expected to grow at a rate of at least 20% a year. But for a European water company to be taking a stake in the US water sector is nothing new. The UK's Thames Water has already been manufacturing water filtration equipment in the US for over 10 years. And Thames together with companies such as Vivendi, Suez Lyonnais des Eaux, Severn Trent and Yorkshire Water have already established a firm foothold in a market that they consider is on the point of taking off. Since 1997, these companies have announced US water acquisition deals worth more than $15 billion. According to David Chardavoyne, president of Thames Water in the US, the E'Town purchase is part of the company's five point plan to expand in the US. "What this acquisition does is put Thames Water firmly in the US market. This is a huge market in which O&M contracts and design-build-operate (DBO) are becoming more prevalent. We believe that there are five distinct markets which we can participate in.? These include owning a utility, manufacturing products, providing services, acting as a concessionaire in a DBO or build-own-operate-transfer (Boot) project or participating in an O&M contract. In essence E'Town will provide Thames Water with the spring board to jump into...