Proposal Offers $64.00 per Share to
Connecticut Water Shareholders
Proposal Would Increase to $66.00 per Share
if Inferior San Jose Water Takeover is Terminated with No Break
Fees Payable by Connecticut Water
Proposal Offers Superior Value to All
Constituents and Expedited Path to Completion Compared to
Transaction with San Jose Water
Proposal Also Offers Compelling Premium, 76%
Dividend Uplift and Overall Superior Value Compared to Connecticut
Water’s Standalone Value
Eversource Energy (NYSE: ES) today confirmed that it has
submitted a revised proposal to acquire Connecticut Water Service,
Inc. (Nasdaq: CTWS), which it believes provides a superior
alternative to the previously agreed takeover of Connecticut Water
by SJW Group (NYSE: SJW) (“San Jose Water”).
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20180713005386/en/
Eversource Confirms Full Terms of Revised
Superior Proposal to Connecticut Water (Graphic: Business
Wire).
Under the terms of Eversource’s superior proposal, Eversource
would acquire all of the outstanding shares of Connecticut Water
common stock for $64.00 per share in cash and/or in Eversource
common stock at the election of Connecticut Water shareholders. If
the proposed transaction with San Jose Water is terminated with no
break fees payable by Connecticut Water, Eversource would increase
its offer to $66.00 per share of Connecticut Water. In either
scenario, Eversource’s proposal far exceeds the $61.86 per share
offered by San Jose Water as well as the midpoint of the
Connecticut Water standalone discounted cash flow of $50.90 per
share that Connecticut Water’s own financial advisors disclosed as
part of its fairness opinion analysis. Additionally, Connecticut
Water shareholders electing to receive Eversource stock would
receive 76% dividend accretion6 compared to 2% dividend accretion
in a transaction with San Jose Water.
(1) Midpoint of Connecticut Water’s financial advisor’s
discounted cash flow range of $40.42-$61.38 per Connecticut Water
share, as disclosed in its fairness opinion analysis summarized in
SEC reports; (2) Connecticut Water’s undisturbed share price, as of
March 14, 2018; (3) Implied value of San Jose Water’s offer per
Connecticut Water share as of March 14, 2018, the day before
announcement, calculated using San Jose Water’s undisturbed share
price as of March 14, 2018 of $54.38 multiplied by the exchange
ratio of 1.1375x; (4) Eversource’s superior proposal, submitted on
July 2, 2018; (5) If the proposed transaction with San Jose Water
is terminated with no break fees payable by Connecticut Water,
Eversource would increase its offer to $66.00 per share of
Connecticut Water. (6) The 76% dividend uplift is based on the
$64.00 per share base offer, the closing price of Eversource’s
common stock on July 10, 2018, and the annualized quarterly cash
dividend of $0.3125 per share declared by Connecticut Water on May
10, 2018.
As a tangible sign of Eversource’s commitment to a quick and
efficient transaction close, Eversource has also proposed an
incremental “ticking fee” should Eversource not achieve all
required regulatory approvals within eight months of deal
announcement. This “ticking fee” would result in a $0.50 per share
increase to the offer price paid to Connecticut Water shareholders
for each subsequent calendar quarter required to receive regulatory
approvals following the eight-month deadline. This stands in stark
contrast to San Jose Water’s inferior proposal, which would require
an extensive regulatory review process in San Jose Water’s home
state of California as well as in Connecticut and Maine, where San
Jose Water has no operations.
Despite Connecticut Water’s claims to the contrary, Eversource’s
revised superior proposal includes extensive and specific
commitments to customers, communities and employees. These include:
a base rate freeze for customers through 2022; the doubling of
Connecticut Water’s charitable contributions to the communities it
serves; and the retention of key executives and employees.
Eversource submitted its revised superior proposal
confidentially on July 2, 2018 in hopes of engaging productively
following an initial meeting Eversource requested on June 29, 2018
between Eversource Chairman and Chief Executive James Judge and
Connecticut Water Chairman Carol Wallace and Chief Executive David
Benoit. Contrary to its claims in its July 13, 2018 press release,
Connecticut Water’s board provided no operating or financial
information during or subsequent to this meeting. Connecticut
Water’s board then rejected Eversource’s superior proposal and
refused to engage unless Eversource increased its offer to at least
$69.50 per share. 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.
Eversource believes that the fact that Connecticut Water’s board
is making this $69.50 per share ultimatum while seeking shareholder
approval for a transaction that it has valued at $61.86 once again
demonstrates that the board has shown no interest in carrying out
its fiduciary duties to pursue the best value available for its
shareholders and other constituencies. Eversource has publicly
confirmed the full terms of its improved superior proposal so that
Connecticut Water shareholders are not misled by their board into
accepting an inferior transaction with San Jose Water.
Eversource looks forward to making its case directly to
Connecticut Water shareholders and regulators and will continue to
urge Connecticut Water shareholders to vote “AGAINST” the
inferior San Jose Water proposal by completing the BLUE
proxy card once Eversource publicly files its definitive proxy
materials.
The full text of two letters that Eversource recently submitted
to Connecticut Water’s board are included below:
July 2, 2018
Mr. David C. BenoitPresident and Chief Executive
OfficerConnecticut Water Service, Inc.93 West Main StreetClinton,
CT 06413
Dear David:
Thank you and Carol for the meeting on June 29. It was nice to
meet you both. I very much appreciated the opportunity to discuss
our interest in Connecticut Water, discuss the great potential for
the combined company, and discuss what we believe to be a superior
proposal compared to your proposed transaction with SJW Group.
As mentioned at our meeting, I am submitting in writing a
revised proposal to acquire Connecticut Water under terms we
believe are 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. We think that both the terms of our improved superior
proposal and the environment in which you evaluate our improved
proposal are very important considerations.
Eversource proposes to acquire all the outstanding shares of
Connecticut Water common stock for $64.00 per share in cash and/or
in Eversource common stock at the election of Connecticut Water
shareholders. If your proposed transaction with SJW is terminated
with no break fees payable by you, we would increase our offer to
$66.00 per Connecticut Water share. Additionally, as a tangible
sign of our commitment to a quick and efficient transaction close,
we would be willing to offer an incremental “ticking fee” should
Eversource not achieve all required regulatory approvals within
eight months of deal announcement. This “ticking fee” would result
in a $0.50 per share increase to the offer price paid to
Connecticut Water shareholders for each subsequent calendar quarter
required to close the transaction following the eight-month
deadline.
Connecticut Water shareholders electing to receive Eversource
stock as consideration would realize the equivalent of a 77%
dividend uplift based on the $64.00 per share base offer, the
closing price of Eversource’s common stock on June 29, 2018, and
the annualized quarterly cash dividend of $0.3125 per share
declared by Connecticut Water on May 10, 2018.
Our proposal also commits to the following benefits for
Connecticut Water customers, employees, suppliers and local
communities post-closing:
- Provide rate stability for customers by
freezing base rates through 2022;
- Double Connecticut Water’s charitable
contributions to the communities it serves;
- Create a separate Connecticut Water
subsidiary within the Eversource organization, retaining the
identity and culture your team has established;
- Form a Water Advisory Board, including
five members of Connecticut Water’s current board to advise on key
decisions and growth opportunities for our Water business;
- Retain key executives and employees
that have helped drive the success of Connecticut Water;
- Implement best practices across the
entire Water (and Eversource) platform to leverage skills and
talents;
These substantial improvements are intended to convey a very
clear message that we respect and value the Connecticut Water
Platform and we believe that this transaction is materially better
for all constituents than the contemplated transaction with SJW. In
addition, we believe this improved offer represents a superior
alternative to Connecticut Water’s standalone proposition.
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 and other regulatory bodies 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, for which we obtained regulatory approvals in four states
(including Connecticut and Maine) and completed the transaction
within five months from the regulatory filing date and within six
months from the announcement of the transaction. Additionally,
Eversource is uniquely positioned to create substantial benefits
for customers served by Connecticut Water, while preserving local
ownership and accountability.
In summation, Eversource’s combination with 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 Board members
who support the submission of this proposal. For the time being, we
are planning to keep this proposal confidential to allow the
Connecticut Water Board and its advisors ample time to analyze and
engage with us constructively. We would appreciate your response by
July 9, 2018. 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, which we believe
can be completed expeditiously and within two weeks of receiving
access to your data room. 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
+ + +
July 11, 2018
Mr. David C. BenoitPresident and Chief Executive
OfficerConnecticut Water Service, Inc.93 West Main StreetClinton,
CT 06413
Dear David:
Thank you and Carol for the call and subsequent letter on July
7. We appreciate your swift response to our improved proposal that
included a price increase to $64.00 and substantial customer,
charitable and other commitments. We were very disappointed with
your unwillingness to substantially engage and surprised by your
ask, and the lack of rationale for our bid having to exceed $69.50
per share for you to engage in discussions.
We firmly believe that our revised proposal to acquire all of
the outstanding shares of Connecticut Water common stock for $64.00
per share in cash and/or in Eversource common stock, along with the
76% dividend uplift and the extensive and specific customer,
employee, and charitable benefits, is superior compared to your
proposed sale to San Jose Water that has questionable benefits for
all constituents. We continue to struggle to envision the synergies
required to justify your valuation ask that would be derived from
combining two utilities on opposite sides of the country. The
trading prices currently in the market certainly imply the
expectation that your transaction with San Jose Water will not
close.
Additionally, we believe our revised offer of $64.00 per share
is also clearly superior to your standalone valuation. As disclosed
in your SEC filings, your own advisor Wells Fargo valued
Connecticut Water at a midpoint discounted cash flow of $50.90 per
share. Our offer represents a 26% premium to your own advisor’s
midpoint DCF valuation and represents an extremely compelling 27.5x
multiple to Connecticut Water’s estimated 2018 earnings per share,
which is at the high end of recent utility transactions. We are
confident that your shareholders will also find our offer
compelling.
Furthermore, we have included a meaningful ticking fee if our
transaction takes longer than 8 months to get regulatory approval
and we have stated that should you and San Jose Water mutually
terminate your agreement and eliminate any termination fees to be
paid, we would increase our offer to $66.00 per share, delivering
further value to your shareholders. We strongly prefer to negotiate
privately and encourage you to reconsider what we think is an
unreasonable ask of at least $69.50 per share to engage. In your
recent letter to us, you set a deadline of July 12 for our
response. We’d ask that you please respond by close of business on
that date if there is a more reasonable position to discuss.
Regards,
James J. JudgeChairman, President and Chief Executive
OfficerEversource Energy
For more information on Eversource’s superior proposal for
Connecticut Water, please visit www.betterCTwater.com.
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 its more than 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). For more information on our water
services, visit www.aquarionwater.com.
Forward Looking Statements:This news release includes
statements concerning Eversource Energy’s (“Eversource”)
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
fact that we may fail to reach agreement on terms of a potential
transaction with Connecticut Water, or fail to complete any such
transaction on a timely basis or on favorable terms; the negative
effects on Connecticut Water’s business resulting from the pendency
of the merger proposals; that we may not receive regulatory
approvals within the expected timeframe; that we may not be able to
close the proposed transaction with Connecticut Water promptly and
effectively, or at all; 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’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’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 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.
Certain Information Regarding
Participants:Eversource and certain of its trustees,
executive officers and employees may be deemed participants in the
solicitation of proxies from Connecticut Water shareholders in
connection with Connecticut Water’s Special Meeting of
Shareholders. Information about the interests in Connecticut Water
of Eversource and such trustees, executive officers and employees
is set forth in a preliminary proxy statement that was filed with
the SEC on June 14, 2018 (the “Eversource Proxy”).
Additional Information:Investors are urged to read in its
entirety the Eversource Proxy, which is available now, and the
definitive proxy statement and any other relevant documents filed
with the SEC when they become available, because they contain (or
will contain) important information. The Eversource Proxy, and any
other documents filed by Eversource with the SEC, may be obtained
free of charge at the SEC web site at www.sec.gov. The Eversource
Proxy and such other documents may also be obtained free of charge
by contacting D.F. King & Co., Inc. at: (800) 967-5071 or 48
Wall Street, 22nd Floor, New York, New York 10005.
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended. This communication relates to a
proposal that Eversource has made for a business combination
transaction with Connecticut Water. In furtherance of this proposal
and subject to future developments, if Eversource and
Connecticut Water agree on a negotiated transaction,
Eversource and Connecticut Water may file one or more
registration statements, tender offer statements, prospectuses,
proxy statements or other documents with the SEC. This
communication is not a substitute for any registration statement,
tender offer statement, prospectus, proxy statement or other
document Eversource and/or Connecticut Water file with the SEC
in connection with the proposed transaction. Investors are urged to
read carefully the registration statement(s), tender offer
statement(s), prospectus(es), proxy statement(s) and other
documents filed with the SEC when they become available because
they will contain important information about Eversource,
Connecticut Water and the proposed transaction. Investors may
obtain free copies of these documents (when they are available) and
other related documents filed with the SEC at
the SEC’s web site at www.sec.gov or by directing a
request to Eversource’s Investor Relations department at
(860) 665-5154 or by email
to jeffrey.kotkin@eversource.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180713005386/en/
Media Contacts:EversourceCaroline Pretyman,
617-424-2460caroline.pretyman@eversource.comorBrunswick
GroupJonathan Doorley / Darren McDermott, 212-333-3810orInvestor
Contacts:EversourceJeffrey R. Kotkin,
860-665-5154jeffrey.kotkin@eversource.comorD.F. King & Co.,
Inc.Edward McCarthy / Michael Madalon, 212-269-5550
Eversource Energy (NYSE:ES)
Historical Stock Chart
From Mar 2024 to Apr 2024
Eversource Energy (NYSE:ES)
Historical Stock Chart
From Apr 2023 to Apr 2024