H2O America’s TWC, TWOS to acquire Quadvest for $540M

H2O America (HTO) announced that its regulated Texas water and wastewater utility, The Texas Water Company, along with its affiliate Texas Water Operation Services, and Quadvest, entered into respective agreements pursuant to which TWC and TWOS will acquire all of the assets owned by Quadvest. The company said, “Quadvest is one of the largest water and wastewater utilities in Texas, with over 47,000 active connections and over 89,000 connections under contract and pending development. Its facilities include 50 water treatment plants, 27 wastewater treatment plants, and 89 lift stations and underground assets, serving approximately 69 developments. Quadvest brings to TWC operational scale, a strong development pipeline in some of the fastest growing parts of the Houston region, meaningful partnerships with a range of developers and community leaders, in-house engineering, procurement and construction capabilities, capital investment opportunities, and a talented and experienced team. This combination supports H2O America’s ongoing efforts to diversify, extend, and enhance its services for customers across the U.S. Based on customer connections, Texas customers would have comprised approximately 17% of H2O America’s total service base as of December 31, 2024, versus approximately 7% standalone, and they are projected to comprise approximately 26% of H2O America’s service base by 2029. The transaction accelerates TWC’s strategic expansion from the San Antonio and Austin corridor into the Greater Houston metro area, one of the fastest-growing regions in Texas. Together, TWC and Quadvest will create the second largest investor-owned water and wastewater utility in Texas, based on connections. The combined company will have even stronger builder and developer ties, with an active pipeline of approximately 96,000 connections under contract.2 H2O America is committed to continuing its investment in Texas, with plans to spend over $500 million in the state over the next five years. As a result of this transaction, H2O America expects to increase its customer-focused, consolidated five-year capital spending plan to approximately $2.1B, an increase of 6%.” Pursuant to the first agreement, TWC will acquire regulated systems owned by Quadvest, L.P. for $483.6M, and under the second agreement, TWOS will acquire systems owned by Quadvest Wholesale for $56.4M, for a combined transaction value of $540M. The transaction will be financed by a combination of privately placed debt and equity infusions from H2O America. The transaction will be financed in a manner that allows H2O America to maintain its strong balance sheet and current credit ratings. The transaction is not subject to any financing condition. The transaction was unanimously approved by the H2O America and TWC Boards of Directors. The transaction is expected to close by mid-2026, subject to customary closing conditions and approvals, including the approvals of the Public Utility Commission of Texas and expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.