Pennichuck to Nashua: No deal

NASHUA – Pennichuck Corp. announced today that it has rejected the city’s $121 million offer to purchase the company and all its subsidiaries. In unanimously rejecting the city’s proposal, the company’s board of directors concluded that the offer:

– Is inadequate and not in the best interests of the utility’s shareholders.

– Underestimates the value of the company’s assets, the value of its shares, and potential tax liabilities that would result from the sale.

– Is an attempt to acquire company assets without paying fair market value.

“We do not believe the city of Nashua performed the due diligence to properly evaluate Pennichuck assets based on fair market value, nor did it take into consideration the tax event that would be triggered by a cash transaction,” said Donald Correll, president and chief executive officer, in a prepared statement released this morning.

“The board’s decision to reject the proposal is a clear indication that the company takes its fiduciary responsibility very seriously, and will take whatever steps are necessary to protect the interests of customers, shareholders, and employees.”

Last month, city officials announced they had offered Pennichuck $121 million, which matches the deal reached more than 18 months ago between Pennichuck and Philadelphia Suburban Corp., and includes an additional $15 million surcharge to cover tax liabilities faced by the local water company.

The deal with Philadelphia Suburban, announced in April 2002, fell through shortly after city voters authorized city officials in January of this year to pursue acquisition of the company.

At the time of the city’s $121 million offer, Mayor Bernie Streeter said he wanted negotiations between Pennichuck and City Hall to conclude in a friendly business deal, instead of a drawn-out battle before the state Public Utilities Commission.

At 11 a.m. today, about 90 minutes after the announcement, Pennichuck stock was trading at $28.48, up 10 cents, or 0.35 percent, on the NASDAQ stock exchange.