Maine Water Co.'s parent firm seeks PUC approval of its merger
Courtesy / Connecticut Water Co.
Connecticut Water Service Inc. (NASDAQ: CTWS), parent company of Maine Water Co., and California-based SJW Group have filed an application with the Maine Public Utilities Commission seeking approval for their proposed all-stock transaction that would create the third largest water and wastewater utility in the United States, with operations in four states.
Connecticut Water Service Inc. (NASDAQ: CTWS), parent company of Maine Water Co., and SJW Group (NYSE: SJW) filed an application with the Maine Public Utilities Commission on Friday seeking approval of the “merger of equals” in a transaction that’s expected to close by the end of the year.
The two companies also filed for approval with the Connecticut Public Utilities Regulatory Authority that same day
“This is an important milestone in the regulatory approval process,” David C. Benoit, president and CEO of CTWS, said in a news release. “We are eager to demonstrate to our regulators the clear benefits of the merger for our customers, employees and communities that can be realized through the sharing of best practices, operational expertise and resources of the combined company. Through the merger, we will have the unique benefit of being able to maintain our presence and locally-based teams of water professionals in Connecticut and Maine to deliver safe, reliable water service in our communities while being part of a larger, stronger national organization.”
In their applications, both companies detail the specific benefits of the transaction and how it will serve the public interest. Among the commitments made in the applications, both companies indicate that there will be no changes to customer rates nor any job cuts or employee layoffs as a result of the merger of equals.
Shareholders urged to reject competing bid
The filings were followed on Saturday by a letter from Benoit to CTWS shareholders encouraging them to reject Eversource Energy's $750 million bid to derail the proposed merger with California-based SJW Group.
Mincing no words, Benoit characterized Eversource Energy’s competing bid as an attempt “to derail our merger through an unsolicited, hostile acquisition campaign” to obtain CTWS.
Eversource, which diversified into the water business last year with its $1.68 billion acquisition of Bridgeport, Conn.-based Aquarion Water Co., is urging Connecticut Water shareholders to force Connecticut Water's board to "seriously discuss" what it is characterizing as its "superior proposal" to purchase Connecticut Water.
Benoit disputed that assertion, citing in his letter Eversource’s “dismal record of customer service” and “concerns of independent industry analysts who have publicly questioned the merits of Eversource’s unsolicited hostile campaign and Eversource’s ability to grow.”
Maine Water files in support of merger
In a 10-page document filed with the Maine PUC on Friday, Maine Water Co. President Richard L. Knowlton testified that the proposed merger of CTWS and SJW Group would benefit Maine Water’s 32,000 customers and its 12 company-owned water systems.
“With the merger, Maine Water Co. will benefit from being part of a larger, stronger company with shared values and opportunities to leverage skills and resources,” Knowlton wrote. “The sharing of best practices, IT systems, operation expertise and more extensive resources can enhance the delivery of service to Maine customers. Maine Water Co. will have access to SJW’s well-developed customer service, mobile workforce, capital planning and asset management platforms.”
Knowlton stated that SJW already has reviewed Maine Water’s capital budget and supports the new $50 million water treatment plant proposed in Biddeford.
“To the extent Maine Water Co. will be part of a larger, stronger organization constructing the new facility, our customers may benefit from potential lower cost of capital and purchasing power leveraged in delivering on that project and other investments in the communities we serve,” Knowlton wrote, adding that “all Maine employees will remain with the company to serve our existing Maine customers.”
Next steps
The CTWS-SJW Group transaction remains subject to customary closing conditions and approvals, including the approval of the issuance of shares by SJW Group stockholders, the approval of Connecticut Water shareholders, the approvals of the two state utilities commissions and the approval of the Federal Communications Commission.
On April 30, SJW Group and Connecticut Water announced that the Federal Trade Commission has granted early termination of the Hart Scott Rodino waiting period for the companies’ merger of equals.
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