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August 7, 2018

CT Water, suitor amend $1B merger pact

Photo | Contributed A Connecticut Water truck outside Middlesex Hospital.
By Gregory Seay

The California suitor for Connecticut Water Service Inc. has amended its $1.1 billion merger offer to all cash from stock to mute "distractions'' from any competing offers.

SJW Group, parent of San Jose Water Co., one of the West Coast's largest water purveyors, announced the revised offer sheet Monday for Clinton-based Connecticut Water, one of this state's and New England's largest water utilities.

SJW said in a statement "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."

CT Water Chairwoman Carol P. Wallace, in the statement echoed later comments from president and CEO David Benoit, that "we are confident that SJW Group is the ideal partner for Connecticut Water … ."

Both utilities' boards approved the revised deal pact, the company said, with Eric Thornburg, Connecticut Water's ex-chief executive officer and now SJW's CEO, abstaining from the vote due to his ownership of CT Water stock.

The merger, originally set to close at yearend, is now heading toward closing in the first quarter of 2019, Benoit said.

CT Water stockholders and utility regulators in Connecticut and Maine must still approve the revised deal terms, a CT Water spokesman said Monday. SJW stockholders do not.

Since announcing their proposed combination in mid-March, originally a stock-swap worth $61.86 a share, or $750 million -- based on both utilities' stock prices at the time -- another major Connecticut water utility, Eversource, countered April 5 with an unsolicited cash/stock offer worth $63.50 a share.

Also, SJW Group's West Coast rival, California Water Service Group, stepped up with an offer of $68.25 a share, or $1.9 billion, to buy SJW. That offer, too, was rejected.

After rejecting Eversource's CT Water bid, both merger partners in May called a timeout to elicit more competing offers, however, no new ones emerged by the late June deadline.

Eversource, which purchased Bridgeport-based Aquarion Water Co. last year for $1.68 billion, declined the opportunity to rebid and said at the time that CT Water's "severely limited" process "fails to reflect a sincere intention" to seek new offers.

Benoit said Monday his company has not received a revised offer from Eversource.

An Eversource spokeswoman said late Monday that the Hartford/Boston electric-water-natural gas utility is evaluating the latest developments and "will be disciplined in our pursuit of this or any transaction that makes strategic or financial sense for us.''

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