Connecticut Water's merger with SJW Group takes a new twist
Courtesy / Connecticut Water Service Inc.
Connecticut Water Service Inc., headquartered in Clinton, Conn., and the owner of Maine Water Co., announced today it is soliciting proposals from alternative merger partners. The company said it remains committed to the the merger agreement with California-based SJW Group, but is soliciting other proposals to give its shareholders "full confidence in the company's strategic direction and to know that every viable alternative has been explored."
Connecticut Water Service Inc. (NASDAQ: CTWS), parent company of Maine Water Co., announced today a new twist in its merger agreement with California-based SJW Group (NYSE: SJW), stating that terms of the agreement have been amended to allow it to solicit proposals from alternative merger partners.
The new “go-shop provision,” which was unanimously approved by Connecticut Water’s board of directors, states that with the assistance of its financial advisers, the company “will actively solicit proposals for an alternative merger, acquisition or other strategic transaction involving Connecticut Water. Connecticut Water has a right under the amended merger agreement to review and negotiate any alternative proposals received from third parties until 11:59 p.m. Eastern time on July 14, 2018.”
Eversource Energy (NYSE: ES), which diversified into the water business last year with its $1.68 billion acquisition of Bridgeport, Conn.-based Aquarion Water Co., will be among those invited to participate, Connecticut Water stated in today’s news release. Eversource Energy announced on April 27 a competing $750 million bid to derail Connecticut Water’s proposed merger with California-based SJW Group.Â
In today’s news release, Connecticut Water reaffirmed earlier statements that its board does not believe Eversource’s current $63.50 per share proposal is better than the SJW Group merger agreement — noting that its board had unanimously rejected Eversource’s terms because they “substantially” undervalue Connecticut Water.
“We believe this additional step and public process by the board is appropriate to allow all of our shareholders to have full confidence in the company’s strategic direction and to know that every viable alternative has been explored,” Carol Wallace, chairman of the Connecticut Water board of directors, said regarding the amended merger agreement’s go-shop provision.
Solicitation of alternative partners begins today
Connecticut Water said that with its financial advisors it will begin soliciting third-party inquiries today. Wells Fargo Securities, LLC is serving as Connecticut Water’s financial advisor and Sullivan & Cromwell LLP as its legal counsel.
“At this time, Connecticut Water remains subject to the SJW Group merger agreement and the Connecticut Water board has not changed its recommendation in favor of the merger of equals with SJW Group,” the company stated in its news release.
Under the terms of the Connecticut Water-SJW Group’s agreement announced on March 15, Connecticut Water shareholders will receive 1.1375 shares of SJW Group common stock for each share of Connecticut Water common stock they own, the equivalent of $64.72 per share based on SJW Group’s closing stock price as of April 25, 2018.
Following closing of the transaction, Connecticut Water shareholders will own approximately 40% of the combined company and SJW Group shareholders will own approximately 60%, on a fully diluted basis.
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