Connecticut Water Service, Inc. (NASDAQ: CTWS) today announced that it and SJW Group (NYSE: SJW) have amended the terms of the companies' merger agreement.
The amended agreement, which was unanimously approved by the Connecticut Water Board of Directors, includes a new go-shop provision, pursuant to which Connecticut Water, with the assistance of its financial advisors, will actively solicit proposals for an alternative merger, acquisition or other strategic transaction involving Connecticut Water. Connecticut Water has a right under the amended merger agreement to review and negotiate any alternative proposals received from third parties until 11:59 p.m. Eastern time on July 14, 2018.
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. Before announcing our agreement with SJW Group, the Board considered various alternatives and determined that the SJW Group merger delivered on this objective, providing substantial value to our shareholders both in the near-and long-term. We have heard from many stakeholders who also believe in the value and important benefits that the SJW Group merger provides for our shareholders, customers, employees and communities. We believe this additional step and public process by the Board is appropriate to allow all of our shareholders to have full confidence in the Company's strategic direction and to know that every viable alternative has been explored."
In connection with the solicitation process, Connecticut Water and its financial advisors will begin soliciting third party indications of interest today. Eversource Energy (NYSE: ES) will be among those invited to participate, however, Connecticut Water reaffirmed that the Board does not believe that Eversource's current $63.50 per share proposal is a superior proposal to the SJW Group merger agreement. Moreover, the Connecticut Water Board has unanimously determined that it would not agree to a transaction with Eversource on the terms currently proposed, regardless of the outcome of the proposed SJW Group merger, because the Connecticut Water Board believes that the current Eversource proposal substantially undervalues Connecticut Water.
At this time, Connecticut Water remains subject to the SJW Group merger agreement, and the Connecticut Water Board has not changed its recommendation in favor of the merger of equals with SJW Group. As previously announced on March 15, 2018, under the terms of the 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 $64.72 per share based on SJW Group's closing stock price as of April 25, 2018.1 Following 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.
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.
