Dutch utility giant Nuon to buy Utilities, Inc., a Northbrook water company

March 29, 2001

BY TAMMY WILLIAMSON BUSINESS REPORTER

Northbrook-based Utilities Inc., which provides water and wastewater treatment services in rapidly growing areas, agreed to be bought by Dutch utility giant Nuon NV for $400 million.

Utilities Inc., the largest privately owned U.S. water company, operates in 16 states with more than 235,000 customers, mostly residential. It has more than 16,000 residential customers in Illinois, mainly in or near Clarendon Hills, Deerfield, Galena, Joliet and McHenry, a spokesman said. The company tends to serve rapidly developing rural areas, where municipal water services aren't available.

Amsterdam-based Nuon, with more than 5 million electric, water, gas and heating customers, has bought or invested in other U.S. utilities in recent years, though the Utilities Inc. purchase is its first acquisition of a water company in the United States.

The acquisition brings Utilities Inc. into an emerging global market for water services, said James Camaren, Utilities chairman and CEO.

"It's necessary to stay in the game, where you're talking about trillions of dollars needed to go ahead and be a major player," he said.

Because Nuon does not have any operations in Utilities Inc.'s territory, the company doesn't plan any layoffs of its work force of 300 people, Camaren added.

The water industry has undergone some consolidation in recent years, though there are still some 55,000 municipal-owned, privately held and publicly held water companies. About 85 percent of those are private or municipal, and "much of that are mom-and-pop shops or small municipalities," said Joan Goodman, a stock analyst with the Pershing division of Donaldson, Lufkin & Jenrette in Chicago.

Goodman said economics are driving much of the consolidation. "They are being pushed by the [Environmental Protection Agency] to do more testing every day. A second problem is that the infrastructure is getting old. It is easier for them many times to sell to a larger company."

Utilities Inc. was founded in 1965, growing from "what was a regional Midwest operation to a national operation," Camaren said. About 90 percent of its customers are residential, and the remaining 10 percent are businesses, he said. The company recently expanded into offering treated, disinfected wastewater to farmers for crop irrigation.

The company has about 400 private investors, including Camaren, and sales last year of $64 million, a gain of 13 percent from 1999. Its profit in 2000 was $10 million, an increase of 17 percent from the previous year.