Acquisition would combine two local
Connecticut businesses with highly complementary footprints in the
Northeast
Proposal represents superior alternative to
generate value for shareholders, employees, customers, and local
communities
Eversource Energy (NYSE: ES) today announced that on April 5,
2018 it made a proposal to acquire all the outstanding shares of
Connecticut Water Service, Inc. (Nasdaq: CTWS) for $63.50 per share
in cash and/or in Eversource common shares at the election of
Connecticut Water shareholders.
Eversource believes its proposal is a superior alternative to
the all-stock transaction proposed in SJW Group’s (NYSE: SJW)
agreement announced March 15, 2018 to acquire Connecticut Water.
Eversource’s proposal represents a 21% premium to Connecticut
Water’s closing share price on March 14, 2018, the day prior to the
SJW announcement. Eversource’s proposal also represents a premium
of 22% to Connecticut Water’s 20-day volume-weighted average price
as of March 14, 2018. In addition, those Connecticut Water
shareholders who elect to receive Eversource shares would realize
the equivalent of an 81% dividend uplift based on the closing price
of Eversource’s shares on April 4, 2018 and the annualized
quarterly dividend of $0.2975 per share declared by Connecticut
Water on January 18, 2018.
Eversource has attempted to engage privately with Connecticut
Water for some time. The company expressed its interest in pursuing
an acquisition of Connecticut Water in 2017. On April 5, 2018,
Eversource verbally communicated its intent to submit a proposal to
David C. Benoit, the Chief Executive Officer of Connecticut Water,
and delivered a written proposal the same day. On April 17, 2018,
Eversource sent a follow-up communication to Connecticut Water
expressing its continued interest in pursuing an acquisition.
“We believe that our proposal represents a unique opportunity to
deliver significant and immediate value to Connecticut Water’s
shareholders, customers, employees, and local communities,” said
Eversource Chairman, President and Chief Executive Officer Jim
Judge. “As such, we were surprised and disappointed that
Connecticut Water’s Board of Directors has been unwilling to engage
in discussions with us. We urge the Board of Connecticut Water to
act in the best interests of its shareholders by meeting with us to
seriously discuss our compelling proposal.”
Eversource has a best-in-class financial profile, including a
market capitalization of approximately $19 billion, a long-track
record of consistent and robust earnings and dividend growth, an
industry best S&P credit rating, and a strong and growing
dividend. There would be no financing contingency as part of the
transaction.
The proposed transaction would combine two highly complementary
local businesses, and would enable cost-effective regional
investment and support economic growth. Eversource is the parent
company of Aquarion Water Company, a Connecticut based water
utility whose service territory is in close proximity to
Connecticut Water’s service territory. Aquarion Water serves nearly
230,000 customers in Connecticut, Massachusetts, and New Hampshire,
with approximately 90% located in Connecticut. Connecticut Water
serves approximately 125,000 customers in Connecticut and Maine
with approximately 85% located in Connecticut.
“The proposed transaction would provide Connecticut Water
customers with the benefit of premier service quality and a highly
reliable water supply into the future,” said Aquarion President and
Chief Executive Officer Charles Firlotte. “The combined company
would have a complementary service territory and would allow for an
expansion of the superior customer service our employees proudly
provide.”
Eversource has retained Goldman Sachs as its financial advisor
and Ropes & Gray as its legal advisor on this matter.
The full text of Eversource’s April 5, 2018 non-binding proposal
to acquire Connecticut Water appears below:
April 5, 2018
Mr. David C. BenoitPresident and Chief Executive
OfficerConnecticut Water Service, Inc.93 West Main StreetClinton,
CT 06413
Dear David:
On behalf of Eversource Energy (“Eversource”), I am hereby
submitting a proposal to acquire Connecticut Water Service, Inc.
(“Connecticut Water”). As you are likely aware, we expressed
interest in pursuing an acquisition of Connecticut Water in the
second half of 2017. At this time, we are proposing terms for an
acquisition that we firmly view as superior to the terms of the
proposed transaction with San Jose Water (“SJW”), reasonably likely
to lead to a Superior CTWS Proposal (as defined in the merger
agreement with SJW) and in the best interest of the customers,
employees, suppliers, local communities and shareholders of
Connecticut Water due to the greater benefits achievable through an
Eversource transaction.
Eversource proposes to acquire all of the outstanding shares of
Connecticut Water common stock for $63.50 per share in cash and/or
in Eversource common stock at the election of Connecticut Water
shareholders. Connecticut Water shareholders electing to receive
Eversource stock as consideration would realize the equivalent of
an 81% dividend uplift based on the closing price of Eversource’s
common stock on April 4, 2018 and the annualized quarterly cash
dividend of $0.2975 per share declared by Connecticut Water on
January 18, 2018. The $63.50 consideration payable to Connecticut
Water shareholders would not be reduced by the termination fee
payable to SJW.
The $63.50 price represents a 21% premium to Connecticut Water’s
undisturbed share price on March 14, 2018 and a 22% premium to the
20-day VWAP for the period ending March 14, 2018.
Eversource has a market capitalization of approximately $19
billion and is an A+ rated company by Standard & Poor’s, making
Eversource a strong financial partner for the transaction. There
would be no financing contingency as part of the transaction.
Eversource has consistently demonstrated credibility, expertise,
and responsiveness in its proceedings before the Connecticut Public
Utilities Regulatory Authority (“CT PURA”) and has a strong track
record for successful regulatory outcomes. In particular,
Eversource has considerable experience in obtaining regulatory
approvals required for utility mergers and acquisitions. This is
evidenced through our recent acquisition of Aquarion Water Company
(“Aquarion”), for which we obtained regulatory approvals in four
states and completed the transaction within five months from the
regulatory filing date and within six months from the announcement
of the transaction.
In the final decision issued by CT PURA approving the Aquarion
acquisition, attributes of the transaction that were cited as
particularly beneficial to customers and employees included local
ownership, financial stability, employee benefits and community
support. In fact, Eversource is uniquely positioned to create
substantial benefits for customers served by Connecticut Water,
while preserving local ownership and accountability. As part of the
approvals required to complete the Aquarion acquisition, Eversource
obtained regulatory approval in Maine with a positive outcome for
the company and a minimum of administrative process.
In summation, Eversource’s acquisition of Connecticut Water
would be a compelling, superior alternative to the SJW transaction
for Connecticut Water’s customers, employees, suppliers,
communities and shareholders. An Eversource transaction would also
leverage the geographical proximity of the Connecticut Water and
Aquarion systems to enable cost-effective infrastructure investment
and support regional economic growth.
I have reviewed this opportunity with Eversource’s Board of
Trustees, which supports the submission of this proposal. We are
prepared to engage with you immediately and to reach a definitive
agreement as expeditiously as possible. For the avoidance of doubt,
this proposal is a non-binding indication of interest, subject to
confirmatory due diligence. A binding obligation with respect to
this transaction will result only from the execution of a
definitive agreement containing terms and conditions that are
mutually acceptable to the parties.
We look forward to your prompt response.
Sincerely,
James J. JudgeChairman, President and Chief Executive
OfficerEversource Energy
About Eversource:Eversource (NYSE: ES) transmits and
delivers electricity and natural gas and supplies water to
approximately 4 million customers in Connecticut, Massachusetts and
New Hampshire. Recognized as the top U.S. utility for its energy
efficiency programs by the sustainability advocacy organization
Ceres, Eversource harnesses the commitment of about 8,000 employees
across three states to build a single, united company around the
mission of safely delivering reliable energy and water with
superior customer service. For more information, please visit our
website (www.eversource.com) and follow us on Twitter
(@EversourceCorp) and Facebook (facebook.com/EversourceEnergy). For
more information on our water services, visit
www.aquarionwater.com.
Forward Looking Statement:This news release includes
statements concerning Eversource Energy’s expectations, beliefs,
plans, objectives, goals, strategies, assumptions of future events,
future financial performance or growth and other statements that
are not historical facts. These statements are “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. In some cases, readers can identify these
forward-looking statements through the use of words or phrases such
as “estimate,” “expect,” “anticipate,” “intend,” “plan,” “project,”
“believe,” “forecast,” “should,” “could” and other similar
expressions. Forward-looking statements are based on current
expectations, estimates, assumptions or projections and are not
guarantees of future performance. These expectations, estimates,
assumptions or projections may vary materially from actual results.
Accordingly, any such statements are qualified in their entirety by
reference to, and are accompanied by important factors that could
cause our actual results to differ materially from those contained
in our forward-looking statements, including, but not limited to,
in the case of Eversource’s proposal to acquire Connecticut Water,
the failure to complete the subject transaction upon the terms set
forth in Eversource’s proposal; cyber-attacks or breaches,
including those resulting in the compromise of the confidentiality
of our proprietary information and the personal information of our
customers; acts of war or terrorism or grid disturbances that may
disrupt our transmission and distribution systems; ability or
inability to commence and complete our major strategic development
projects and opportunities; actions or inactions of local, state
and federal regulatory, public policy and taxing bodies;
substandard performance of suppliers; climate change; disruption to
our transmission and distribution systems; new technology and
conservation of energy; contamination or failure of our water
supplies; unauthorized access to confidential and proprietary
information; changes in laws, regulations or regulatory policy;
changes in economic conditions, including impact on interest rates,
tax policies, and customer demand and payment ability; changes in
business conditions, which could include disruptive technology
related to our current or future business model; changes in weather
patterns, including extreme weather and other effects of climate
change; reputational risk; changes in levels or timing of capital
expenditures; technological developments and alternative energy
sources; disruptions in the capital markets or other events that
make Eversource Energy’s access to necessary capital more difficult
or costly; developments in legal or public policy doctrines;
changes in accounting standards and financial reporting
regulations; actions of rating agencies; and other presently
unknown or unforeseen factors.
Other risk factors are detailed in Eversource’s reports filed
with the Securities and Exchange Commission (SEC) and updated as
necessary, and are available on the SEC’s website at www.sec.gov.
All such factors are difficult to predict and contain uncertainties
that may materially affect Eversource Energy’s actual results many
of which are beyond our control. You should not place undue
reliance on the forward-looking statements; each speaks only as of
the date on which such statement is made, and, except as required
by federal securities laws, Eversource Energy undertakes no
obligation to update any forward-looking statement or statements to
reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated
events.
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version on businesswire.com: https://www.businesswire.com/news/home/20180419006506/en/
EversourceMedia Contacts:Caroline Pretyman,
617-424-2460caroline.pretyman@eversource.comorInvestor
Contacts:Jeffrey R. Kotkin,
860-665-5154jeffrey.kotkin@eversource.comorBrunswick GroupJonathan
Doorley, 917-231-6201orDarren McDermott, 917-345-3621
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