Duluth's Allete selling water subsidiary to Japanese company
Allete Inc. is selling one of its subsidiaries to a Japanese company for $270 million.
Tokyo-based Kurita Water Industries Ltd. is set to buy U.S. Water Services, pending regulatory approval, in a move that could boost spending on Allete's renewable energy projects.
"Kurita is a well-respected global enterprise, and this agreement is a win-win for Allete and U.S. Water Services," Allete Chief Financial Officer Bob Adams said in a news release. "Proceeds from the sale will be primarily reinvested in growth initiatives at both our (utilities) and Allete Clean Energy."
Allete, also the parent company of Minnesota Power and Superior Water, Light & Power, paid $168 million for an 87 percent stake in U.S. Water Services in 2015.
U.S. Water, based in St. Michael, Minn., serves more than 5,000 industrial water customers nationwide and has grown substantially since Allete took control of the company.
Kurita made an unsolicited offer for U.S. Water last year, which Allete CEO Al Hodnik called a "unique and timely opportunity to consider an exit from the business at a material gain" during a conference call Friday morning.
The deal is expected to close by this spring.
Allete's stock price had jumped more than 2 percent this morning following the news. The company said it would "consider" using some of the proceeds of the sale on a stock repurchase program.
"We will share further details on potential use of proceeds ... in the coming months," Hodnik said during Friday's call.