CLINTON, Conn., April 19, 2018 /PRNewswire/ -- Connecticut
Water Service, Inc. (NASDAQ: CTWS) today confirmed that after it
entered into a definitive merger agreement with SJW Group (NYSE:
SJW), the Company received a non-binding, unsolicited acquisition
proposal from Eversource Energy (NYSE: ES) for $63.50 per share in cash and/or in Eversource
common stock at the election of Connecticut Water
shareholders.
In accordance with the terms of the SJW Group merger agreement,
Connecticut Water's Board of Directors, in consultation with its
legal and financial advisors, carefully reviewed Eversource's
unsolicited acquisition proposal and today unanimously concluded
that it is not a superior proposal or reasonably likely to lead to
a superior proposal as defined by Connecticut Water's merger
agreement with SJW Group.
As previously announced on March
15, under the terms of the SJW Group agreement, Connecticut
Water shareholders will receive 1.1375 shares of SJW Group common
stock for each share of Connecticut Water common stock they own,
the equivalent of $63.70 per share
based on SJW Group's closing share price on April 19, 2018. Following the closing of
the transaction, Connecticut Water shareholders will own
approximately 40 percent of the combined company and SJW Group
shareholders will own approximately 60 percent, on a fully diluted
basis.
The Connecticut Water Board of Directors continues to
unanimously believe that the merger with SJW Group is in the best
interest of all Connecticut Water shareholders, with significant
long-term benefits for the Company's customers, employees and
communities. In particular, the Company's merger with SJW
Group delivers:
- Significant, immediate premium with opportunity for
continued substantial value creation. In addition to providing
Connecticut Water shareholders with a premium based on the
Company's unaffected stock price on March
14, 2018, the stock-based consideration provides
shareholders with the opportunity to participate in the substantial
upside value that is expected to be created as a result of the
combined company's position as a leading, national, pure-play water
utility company.
- Highly attractive earnings accretion. The SJW Group
merger combination is expected to be immediately accretive to
Connecticut Water's standalone earnings per share, achieving
high-single digit accretion in the first fiscal year post-closing
and maintaining mid- to high-single digit accretion over the next
few years.
- Enhanced growth platform and expanded rate base as a result
of increased scale, geographic diversity and strong financial
foundation. The combined company will be the third largest
investor-owned water and wastewater utility in the United States and will have a strong
multi-state presence in California, Connecticut, Maine and Texas. The increased financial and operating
scale of the new organization provide the opportunity for
investments in service and reliability across a more diverse
geographic footprint, enhancing value for shareholders as well as
for customers and communities.
- Robust, stable dividend with immediate uplift. Upon
closing and subject to market conditions and Board approval at the
time, the new company is expected to establish a dividend at least
equivalent to SJW Group's announced 2018 annual dividend of
$1.12 per share. This represents an
immediate dividend uplift of approximately 7 percent for
Connecticut Water shareholders, when adjusted for the agreed
exchange ratio, based on the annualized quarterly cash dividend of
$0.2975 per share declared by
Connecticut Water on November 9,
2017.
SJW Group has paid a dividend for the last 74 consecutive years and
has increased the annual dividend payment in each of the last 50
years. Connecticut Water has paid a dividend for the last 62
consecutive years and has increased the annual dividend payment in
each of the last 48 years.
- Proven management team with a record of strategic execution,
superior value creation and regional focus. The combined
company will be led by an experienced Board of Directors and
leadership team that leverages the strengths and capabilities of
its subsidiaries. Over the past five years, the Connecticut Water
team, who will remain in place following the close of the
transaction, has delivered a 154 percent total return to the
Company's shareholders, outperforming Connecticut Water's peers and
the Dow Jones Utility Average Index by 54 percent and 122 percent,
respectively. (The Company noted that over the same period
Eversource returned only 57 percent.
- Long-term benefits for customers, employees and
communities. The merger with SJW Group will maintain
Connecticut Water's longstanding commitments to outstanding
customer service, which will be enhanced by sharing of best
practices, operational expertise and more extensive resources.
Each of the combined company's operating utilities and their
customers will continue to be supported locally by a team of
passionate, dedicated employees and existing leaders, with no
merger-related layoffs or significant changes in employee
compensation or benefits packages planned.
In addition to retaining dedicated employee teams across its
footprint, the new company will maintain Connecticut Water's
environmental stewardship and strong community ties, including a
focus on supporting economic development with investments in
growth, safety and reliability.
In reaching the unanimous determination that the Eversource
acquisition proposal was not a superior proposal or reasonably
likely to lead to a superior proposal, and in reaffirming its
intention to unanimously recommend that all Connecticut Water
shareholders vote FOR the SJW Group merger, the Connecticut Water
Board considered the numerous financial and strategic benefits of
the SJW Group merger, as reviewed above, and, among other things,
that:
- The proposed merger with SJW Group is expected to create
greater value for Connecticut Water and its shareholders than
pursuing Eversource's unsolicited acquisition proposal, noting that
over the past five years, Connecticut Water has delivered a 154
percent total return to the Company's shareholders compared to only
57 percent for Eversource over the same period;
- The proposed merger of Connecticut Water and SJW Group presents
Connecticut Water shareholders with the opportunity to benefit from
enhanced future growth prospects, financial strength and a
compelling total return profile for the pro forma combined company,
while allowing Connecticut Water shareholders to maintain their
investment in a pure-play water utility; and
- Connecticut Water shareholders will maintain a meaningful
ownership position in the combined pure-play water company and
continue to benefit from a proven management team who has a record
of delivering superior value creation and world-class customer
service that supports strong operations and regulatory
relationships.
While Connecticut Water has regularly achieved customer
satisfaction rankings above 90 percent, Eversource was ranked in
the bottom quartile of J.D. Power's 2017 customer service rankings
for the East Region and was ranked near the bottom nationally. For
Connecticut Water, delivering safe, clean drinking water is the
priority for 100% of its customers as compared to a small
percentage of Eversource's total customer base.
Carol Wallace, Chairman of the
Connecticut Water Board of Directors, said, "The Connecticut Water
Board and management team are committed to acting in the best
interests of the Company and our shareholders. Having
carefully reviewed the unsolicited acquisition proposal, we
continue to believe that Connecticut Water's merger with SJW Group
is in the best interest of our shareholders, particularly given the
significant growth opportunity that the combined organization will
have as a leading pure-play water company. We also believe
our merger with SJW Group provides important benefits for
customers, employees and communities that would be hard to
replicate in a combination involving contiguous and overlapping
territories, as was contemplated in the unsolicited Eversource
acquisition proposal. Accordingly, the Connecticut Water
Board remains firmly and unanimously in support of the SJW Group
merger agreement."
As previously announced, Connecticut Water's merger with SJW
Group is expected to close by year-end 2018, subject to customary
closing conditions and approvals, including the approval of the
issuance of shares in the transaction by SJW Group stockholders,
the approval of Connecticut Water shareholders, the approvals of
the Connecticut Public Utilities Regulatory Authority and the Maine
Public Utilities Commission, the approval of the Federal
Communications Commission, and the expiration or termination of the
waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act. The transaction is not subject to any financing
condition.
Wells Fargo Securities, LLC is serving as Connecticut Water's
financial advisor and Sullivan & Cromwell LLP as its legal
counsel.
About CTWS
CTWS is a publicly traded holding company headquartered in
Clinton, Connecticut. CTWS is the
parent company of The Connecticut Water Company, The Maine Water
Company, The Avon Water Company, and The Heritage Village Water
Company. Together, these subsidiaries provide water service to more
than 450,000 people in Connecticut
and Maine, and wastewater service
to more than 10,000 people in Connecticut.
Forward-Looking Statements
This document contains forward-looking statements within the
meaning of the Private Litigation Reform Act of 1995, as
amended. Some of these forward-looking statements can be
identified by the use of forward-looking words such as "believes,"
"expects," "may," "will," "should," "seeks," "approximately,"
"intends," "plans," "estimates," "projects," "strategy," or
"anticipates," or the negative of those words or other comparable
terminology.
The accuracy of such statements is subject to a number of risks,
uncertainties and assumptions including, but not limited to, the
following factors: (1) the risk that the conditions to the closing
of the transaction are not satisfied, including the risk that
required approvals from the shareholders of the Company or the
stockholders of SJW Group for the transaction are not obtained; (2)
the risk that the regulatory approvals required for the transaction
are not obtained, or that in order to obtain such regulatory
approvals, conditions are imposed that adversely affect the
anticipated benefits from the proposed transaction or cause the
parties to abandon the proposed transaction; (3) the risk that the
anticipated tax treatment of the transaction is not obtained; (4)
the effect of water, utility, environmental and other governmental
policies and regulations; (5) litigation relating to the
transaction; (6) uncertainties as to the timing of the consummation
of the transaction and the ability of each party to consummate the
transaction; (7) risks that the proposed transaction disrupts the
current plans and operations of SJW Group or the Company; (8) the
ability of SJW Group and the Company to retain and hire key
personnel; (9) competitive responses to the proposed transaction;
(10) unexpected costs, charges or expenses resulting from the
transaction; (11) potential adverse reactions or changes to
business relationships resulting from the announcement or
completion of the transaction; (12) the combined companies' ability
to achieve the growth prospects and synergies expected from the
transaction, as well as delays, challenges and expenses associated
with integrating the combined companies' existing businesses; and
(13) legislative and economic developments. These risks, as
well as other risks associated with the proposed transaction, will
be more fully discussed in the joint proxy statement/prospectus
that will be included in the Registration Statement on Form S-4
that will be filed by SJW Group with the SEC in connection with the
proposed transaction.
In addition, actual results are subject to other risks and
uncertainties that relate more broadly to the Company's overall
business and financial condition, including those more fully
described in the Company's filings with the SEC including its
annual report on Form 10-K for the fiscal year ended December 31, 2017 and SJW Group's overall
business, including those more fully described in SJW Group's
filings with the SEC including its annual report on Form 10-K for
the fiscal year ended December 31,
2017. Forward looking statements are not guarantees of
performance, and speak only as of the date made, and neither the
Company or its management nor SJW Group or its management
undertakes any obligation to update or revise any forward-looking
statements.
Additional Information and Where to Find It
In connection with the proposed transaction between the Company
and SJW Group, SJW Group will file with the SEC a Registration
Statement on Form S-4 that will include a joint proxy statement of
the Company and SJW Group that also constitutes a prospectus of SJW
Group. The Company and SJW Group may also file other
documents with the SEC regarding the proposed transaction.
This document is not a substitute for the joint proxy
statement/prospectus, Form S-4 or any other document which the
Company or SJW Group may file with the SEC. INVESTORS AND
SECURITY HOLDERS OF THE COMPANY AND SJW GROUP ARE URGED TO READ THE
REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS AND
ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH
THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE
DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION
AND RELATED MATTERS. Investors and security holders may
obtain free copies of the Form S-4 and the joint proxy
statement/prospectus (when available) and other documents filed
with the SEC by the Company and SJW Group through the website
maintained by the SEC at www.sec.gov. Copies of documents
filed with the SEC by the Company will be made available free of
charge on the Company's investor relations website at
https://ir.ctwater.com. Copies of documents filed with the
SEC by SJW Group will be made available free of charge on SJW
Group's investor relations website at
https://sjwgroup.com/investor_relations.
No Offer or Solicitation
This communication is for informational purposes only and is not
intended to and does not constitute an offer to sell, or the
solicitation of an offer to subscribe for or buy, or a solicitation
of any vote or approval in any jurisdiction, nor shall there be any
sale, issuance or transfer of securities in any jurisdiction in
which such offer, sale or solicitation would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended, and otherwise in accordance
with applicable law.
Participants in the Solicitation
The Company, SJW Group and certain of their respective directors
and officers, and other members of management and employees, may be
deemed to be participants in the solicitation of proxies from the
holders of the Company and SJW Group securities in respect of the
proposed transaction. Information regarding the Company's
directors and officers is available in the Company's annual report
on Form 10-K for the fiscal year ended December 31, 2017 and its proxy statement for its
2018 annual meeting dated April 6,
2018, which are filed with the SEC. Information
regarding the SJW Group's directors and officers is available in
SJW Group's annual report on Form 10-K for the fiscal year ended
December 31, 2017 and its proxy
statement for its 2018 annual meeting dated March 6, 2018, which are filed with the SEC.
Investors may obtain additional information regarding the interest
of such participants by reading the Form S-4 and the joint proxy
statement/prospectus (when available) and other documents filed
with the SEC by the Company and SJW Group. These documents
will be available free of charge from the sources indicated
above.
Connecticut Water Contacts
Daniel J. Meaney, APR
Director, Corporate Communications
dmeaney@ctwater.com
860-664-6016
Joele Frank, Wilkinson Brimmer
Katcher
Sharon Stern / Barrett Golden / Joseph
Sala
(212) 355-4449
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SOURCE Connecticut Water Service, Inc.