Cost would be a bargain

Valuing a company is no easy task – experts don’t even agree on a fair price for Pennichuck Water Works.

But some simple math reveals that the price of $31 a share floating around now for a sale of Pennichuck Corp. to the city of Nashua is a bargain compared to the $243 million price the New Hampshire Public Utilities Commission set last year for a takeover by eminent domain.

At $31 a share, with 4.25 million shares of the company currently outstanding, Nashua would pay about $132 million for Pennichuck Corp. Add to that the roughly $70 million in Pennichuck debt it would also acquire, and the total price would be about $202 million.

A stock sale would also allow the city to take control of the entire company, Pennichuck Corp. and the land around the watershed that it wants to protect, while the PUC ruling only allows a purchase of Pennichuck Water Works, the subsidiary that owns and operates Nashua’s water system.

The deal would also be a windfall for investors, considering that Pennichuck stock is currently trading for around $20 a share. Not surprisingly, the company’s largest group of investors is pushing hard for it.

However, it remains to be seen whether the city and Pennichuck can come to an agreement on price. The city is appealing the PUC’s $243 million price to the New Hampshire Supreme Court, and it appears city leaders are holding out for an even lower price than investors are pushing.

The price of $31 a share was mentioned in a May 12 report by Gabelli & Co., the group of investors that is the majority owner of Pennichuck stock. The figure share was used to illustrate that a friendly sale for less than the eminent domain price is possible.