SJW Group's merger with Maine Water Co.'s parent is now an all-cash deal
Courtesy / Connecticut Water Co.
Connecticut Water Service Inc. (NASDAQ: CTWS), parent company of Maine Water Co., and California-based SJW Group, announced today that they are proceeding with their "merger of equals," which is now an all-cash deal instead of a stock-for-stock transaction.
SJW Group (NYSE: SJW) and Connecticut Water Service, Inc. (NASDAQ: CTWS) (“Connecticut Water”) today announced that they have amended the terms of their previously announced merger agreement from a stock-for-stock transaction to an all-cash acquisition.
Under the revised merger agreement, SJW Group is offering $70 per common share of Connecticut Water, which is the parent company of Maine Water Co.
The cash transaction, which has a value of $1.1 billion and an equity purchase price of $843 million, is expected to be immediately accretive to SJW Group’s earnings per share in 2019 (post-close), increasing each year thereafter to high single-digit percentage EPS accretion in 2021, the companies stated in a joint news release.
The offer is the latest development in a bidding war between SJW Group and 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., and announced on April 27 a competing $750 million bid to purchase Connecticut Water.
That prompted SJW and Connecticut Water to consider competing offers to the unsolicited bid from Eversource Energy. In mid-June, after its "go-shop" deadline had passed with no new proposals or expressions of interest being submitted, Connecticut Water’s board of directors unanimously voted to conclude the go-shop process and reaffirmed its support for the merger with SJW Group.
“The SJW Group and Connecticut Water Service Board of Directors each approved the amended merger agreement to help facilitate the closing of the companies’ transformative combination and ensure that their shareholders, customers, employees and communities realize its significant benefits,” the companies stated in today’s news release. “The respective boards also believe that the $70 per share cash consideration will resolve any market distractions resulting from otherwise-inferior proposals for Connecticut Water.”
The amended merger agreement was unanimously approved by the Connecticut Water board of directors and by all SJW Group directors other than Eric Thornburg, SJW’s CEO and president, who abstained from voting due to his ownership of Connecticut Water shares and the all-cash nature of the acquisition, according to the news release.
The revised transaction, which is expected to close in the first quarter of 2019, is subject to customary closing conditions and approvals, including the approval of Connecticut Water shareholders, the approvals of the Connecticut Public Utilities Regulatory Authority and the Maine Public Utilities Commission and the approval of the Federal Communications Commission.
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