Dive Brief:
- Empire District Electric has confirmed it is considering the sale of the company and has hired a financial advisor, following media reports last week that sent stock prices up more than 8%, according to people familiar with the situation, Bloomberg reports.
- The Joplin, Missouri-based utility had seen its stock trading just below $23 but when reports of a potential sale surfaced, shares surged; trading closed yesterday at $25.68.
- Utilities have been consolidating to counterbalance slow growth spurred by weak electricity demand, while also contending with rising costs as they replace aging infrastructure to comply with environmental regulations.
Dive Insight:
Empire District is mum on the details, but last week, the utility released a statement confirming it was considering "strategic alternatives," often corporate speak for a sale of the company. Earlier this year company shares topped $30, but have flagged since and have traded as low as $21.
"Empire confirms that it is in the early stages of exploring strategic alternatives, and has retained a financial advisor with regard to the exploration of such strategic alternatives," the company said in its statement. "No decision regarding the strategic alternatives has been made by the Board of Directors. ... No assurances can be given that Empire’s Board of Directors will act on any specific strategic alternative."
Empire delivers electricity, gas and water to 218,000 customers in Missouri, Kansas, Oklahoma, and Arkansas. The company also has a subsidiary which provides fiber optic services.
Two years ago, Moody's named Empire District Electric among a list of small utilities the firm believed were potential takeover targets.
Empire is constructing a combined-cycle gas plant in Kansas, with plans calling for construction to be completed next year. The project, estimated to cost up to $175 million, will replace generation from two coal-fired units it retired to meet federal emissions rules.
