Pennichuck Corporation and Philadelphia Suburban Corporation Agree to Terminate Merger Agreement
Termination Agreement Follows Nashua's Municipalization Efforts
Pennichuck Corporation has reached a mutual agreement with Philadelphia Suburban Corporation (PSC) to terminate PSC's pending acquisition of Pennichuck, which originally was announced in April 2002.
The decision to terminate the merger agreement follows the January 14, 2003 referendum of the City of Nashua, authorizing Nashua to pursue the acquisition, by an eminent domain proceeding or otherwise, of all or a portion of the Company's water works system serving the residents of Nashua and others. The referendum passed by a vote of 6,525 to 1,867.
The Company's president and CEO, Maurice L. Arel, said, "Although a majority of our Board of Directors still believes that the proposed combination with PSC would have been the best strategic alternative for our shareholders, Pennichuck and PSC have concluded, after assessing the ongoing municipalization efforts and particularly the January referendum results, that it was very unlikely that we would be able to complete the merger outlined in our April 29, 2002, agreement. By coming to this agreement today, Pennichuck can conserve its resources and focus its attention on viable alternatives for enhancing shareholder value and customer service." Mr. Arel further noted that despite the termination of the merger agreement with PSC, Pennichuck does not believe that an acquisition of the Pennichuck water systems by the City of Nashua (or a regional water authority) is the best strategic option available for Pennichuck's shareholders and its customers.
Both Pennichuck and PSC had indicated in previous SEC filings that they felt it was unlikely the merger would close by March 31, 2003, after which either party could terminate the merger agreement.
Arel spoke favorably about the management team at PSC. "Although I am disappointed our merger with PSC will not proceed, I want to commend PSC management for the professionalism they exhibited throughout this process to the regulatory officials and local government officials whom they responded to with complete integrity."