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Just Energy (JE) Culminates Acquisition of Filter Group

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Just Energy Group, Inc. recently announced that it has closed its previously announced (Sep 10, 2018) acquisition of Filter Group Inc., headquartered in Toronto, Ontario. The acquired entity is a leading provider of subscription based, home water filtration systems, serving residential customers in Canada and the United States.

Details of the Acquisition

Per the agreement, the company has acquired all the issued and outstanding shares of Filter Group along with the outstanding shareholders’ loan owned by the group.  The purchase consideration comprises $15 million cash plus third-party Filter Group debt worth approximately $22 million coupled with earn-out payments of up to 9.5 million Just Energy common shares, subject to customary closing adjustments.

With this strategic consolidation, Just Energy will be able to expand its operations in the Canadian provinces of Ontario and Manitoba and across the States of Nevada, California, Arizona, Michigan and Illinois with more than 30,000 customers to date. Also, the company expects to attain a profitable customer base via differentiated value-added products and diversify its product mix with non-commodity products and services offerings.

Merger & Acquisition in Utility Space

Utility sector operators don’t shy away from merger and acquisition (M&A) activities to supplement organic growth. In addition to lending their operations a greater scale and scope, such favorable measures lead to cost synergies and better utilization of resources. The larger the companies are, the more access they get to capital resources, essential for vital infrastructure upgrades.

We believe that in a mature energy market like the United States, M&As represent a surefire recipe of success to enhance the players’ market share.

Beginning 2018, SCANA Corporation entered into a merger agreement with Dominion Energy (D - Free Report) . Per the accord, each stock holder of SCANA will likely receive 0.669 shares of Dominion. Considering Dominion’s assumption of $6.7 billion debt for SCANA, the transaction is worth roughly $14.6 billion.

Price Movement

Over the past month, shares of Just Energy have rallied 14.5%, outperforming its industry’s rise of 0.8%.

Zacks Rank & Key Pick

Just Energy currently carries a Zacks Rank #4 (Sell).

A better-ranked stock in the same space is Southwest Gas Corporation (SWX - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Southwest Gas pulled off an average earnings surprise of 24.17% in the trailing four quarters. The Zacks Consensus Estimate for 2018 bottom line per share has moved 3.6% north to $3.71 over the past 60 days.

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