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July 13, 2018

CT Water nixes Eversource's second bid proposal

PHOTO | Contributed A Connecticut Water truck outside Middlesex Hospital.

The bicoastal bidding war for Connecticut Water Service Inc. took another turn Friday after the water utility announced it recently rejected Eversource Energy’s second acquisition proposal.

Connecticut Water says it recently denied Eversource’s revised $64-per-share acquisition bid, arguing it undervalued the water utility. Connecticut Water also reaffirmed its commitment to a “superior,” $750 million merger agreement with California's SJW Group. The “merger of equals” would create the nation's third largest water utility.

Eversource submitted its revised proposal in late June, just days after Connecticut Water announced it would stick with SJW’s merger agreement following an attempt to open the bidding process to new companies.

Connecticut Water said it gauged interest from 50-plus companies, including 20 water and regulated utilities and over 30 financial sponsors during the inquiry period.

The water utility had invited Eversource to rebid, however, Eversource initially shot down the opportunity and reasserted its unsolicited April 5 bid of $63.50 per share.

Connecticut Water CEO and President David C. Benoit and Carol Wallace, chairman of its board of directors, met with Eversource officials on June 29 to discuss the revised proposal, which represents a less than one percent increase from its previous offer, according to a letter of receipt.

“The SJW Group mergers adds substantial value to Connecticut Water’s standalone value both at completion and over the long-term, and this value is significantly greater than what you have proposed,” Connecticut Water said in a statement.

Benoit on Friday told HBJ that Connecticut Water would “give serious consideration” to Eversource’s bid if it raised its offer to $69.50 per share. But Eversource, he says, has not indicated it will revise its second offer sheet.

Eversource on Friday called Connecticut Water’s wishlist “unrealistic.”

“Eversource believes this is an unrealistic position that is wholly inconsistent with Connecticut Water’s own previously disclosed financial analysis as well as current market trading dynamics,” the utility said in a statement.

Under its revised bid, Eversource said it will provide a base rate freeze for customers through 2022; double Connecticut Water’s charitable contributions; and retain the water utility’s key executives and employees.

Eversource says it plans to continue urging Connecticut Water shareholders to vote against its current merger agreement with SJW, which was originally valued at $61.86 per share, but the value of the deal since then has gone up to $64.72 per share.

Under the current transaction, Connecticut Water shareholders would own approximately 40 percent of the combined company and SJW would own the remaining 60 percent.

Benoit says the agreement is expected to be completed before year-end, adding that Connecticut Water will still consider outside bids to best serve its shareholders.

This story was updated to include comments from Eversource Energy

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