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Southern Company to Divest Pivotal Home Solutions for $365M


The Southern Company SO recently agreed to divest Pivotal Home Solutions for $365 million in cash, through its subsidiary, Southern Company Gas to American Water Works Company, Inc. AWK. The deal includes the estimated working capital related to Pivotal Home Solutions' daily operations.

Pivotal Home Solutions is part of Southern Company Gas' operations, which serves around 4.6 million clients as of Mar 22, 2018. Pivotal Home Solutions is a home warranty business, currently running in 18 states, including 1.2 million client contracts. The deal is expected to be over by the second quarter of 2018, after which Pivotal Home Solutions will keep operating from its Naperville, IL headquarters, joining the acquirer’s Homeowner Services portfolio.

American Water — the largest publicly traded water and wastewater utility company in the United States — expects to fund the transaction by 2.23 million common stock offering.

About Southern Company

Atlanta, GA-based Southern Company is one of the largest utilities in the United States. It boasts of a generating capacity of 46,000 megawatts, around 200,000 miles of electric transmission and distribution lines and more than 80,000 miles of natural gas pipelines. Southern Company’s operations include wholesale electricity generation and natural gas services, retail energy services and natural gas storage operations throughout the country.

Price Performance

Southern Company has lost 10.5% last year compared with 3.3% decline of its industry.

Zacks Rank and Stocks to Consider

Southern Company has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the oil and energy sector are CNOOC Limited CEO and Continental Resources, Inc. CLR, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hong Kong-based CNOOC is an integrated energy company. Its revenues for 2018 are anticipated to improve 51.3% year over year, while its bottom line is expected to increase 80.8%.

Oklahoma City, OK-based Continental Resources is an oil and gas exploration and production company. Its revenues for first-quarter 2018 are estimated to soar 55.7% from the year-ago quarter’s figure. For 2018, the bottom line is likely to be up 370.6%.

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