A media release dated April 2, 2013 from Norfolk County announced they had sold their local distribution company (LDC) to Hydro One Inc. and would net $66 million from the sale. At that time County Mayor Travale stated; “This isn't just about the money we received, it's about a partner who was interested in making a long-term investment in the community.”
Well, not to say the Mayor was wrong but the money is important, and that LDC sold for a hefty price. The sale was made for 2.3 times the book value (December 31, 2011), 28.5 times earnings and $3,467. per customer. Those are the kind of numbers that would make sense to an acquiring company if the projections for future growth were huge. To provide an example the Royal Bank presently trades at a multiple of about 12 times earnings so what does Hydro One see that makes this LDC so attractive? Read more »
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