Connecticut Water Service, Inc. (NASDAQ: CTWS) today sent a letter to shareholders in connection with the previously announced transaction with SJW Group (NYSE: SJW). The Special Meeting of Connecticut Water Shareholders to vote on the transaction will be held on November 16, 2018.
The Connecticut Water Service Board of Directors unanimously recommends that shareholders "go green" and vote "FOR" the proposal to approve the SJW Group merger agreement as well as all other proposals related to the SJW Group transaction on the GREEN proxy card. Importantly, not voting has the same effect as a vote against the transaction.
Highlights from the letter include:
- By going GREEN and voting "FOR" the SJW Group transaction on the GREEN proxy card, shareholders are voting to receive significant, certain, premium value of $70 per share in cash.
- The value that Connecticut Water shareholders will receive represents a 33% premium to Connecticut Water's unaffected closing stock price on March 14, 2018, the last trading day before the original SJW Group transaction was announced, and is on par with or exceeds the top end of valuations for comparable transactions.
- Prior to announcing the original agreement with SJW Group in March 2018, Connecticut Water's stock had never closed above $63.55 per share, which underscores the tremendous and immediate upside created by this transaction.
- In addition to maximizing value for Connecticut Water's shareholders, the SJW Group transaction provides significant benefits for the Company's employees, customers and communities that Connecticut Water believes are fundamental to being a successful utility company.
The full text of the letter follows below:
CT WATER + SJW GROUP: AN IDEAL COMBINATION THAT DELIVERS SIGNIFICANT SHAREHOLDER VALUE
GO GREEN AND VOTE "FOR" THE SJW GROUP TRANSACTION TODAY
October 15, 2018
Dear Fellow Shareholder,
On November 16, 2018, Connecticut Water will hold a Special Meeting of Shareholders to vote on the proposed acquisition of our company by SJW Group. Your vote is important, no matter how many or how few shares you own. Moreover, not voting is the same as voting against the SJW Group transaction, so please, go green and vote "FOR" the proposal to approve the SJW Group merger agreement and all related proposals on the enclosed green proxy card today.
THE SJW GROUP TRANSACTION DELIVERS COMPELLING VALUE TO CONNECTICUT WATER SHAREHOLDERS
Delivers Certain, Significant, Premium Value
The $70 per share cash consideration in our agreement ensures that Connecticut Water shareholders receive both certain and significant value. In fact, this price represents a 33% premium to Connecticut Water's unaffected closing stock price1 and is immediately payable to Connecticut Water shareholders at the close of the transaction, which we are on track to complete in the first quarter of 2019.
Exceeds Our All-Time High
Under the terms of our agreement with SJW Group, you will receive $70 in cash for each shareof Connecticut Water common stock you own. Notably, prior to announcing the original agreement with SJW Group in March 2018, Connecticut Water's stock had never closed above $63.55 per share, which underscores the tremendous and immediate upside created by this transaction.
Represents Among the Best M&A Valuations in Our Industry
The Connecticut Water Service Board of Directors takes its responsibility to shareholders seriously, and we worked hard to ensure that our shareholders received full value for their shares. $70 per share represents a highly attractive Price-to-Earnings (P/E) multiple of 30.1x Connecticut Water's earnings per share at the end of 2017. Comparable transactions have delivered 23.4x on average. In other words, the value you are receiving through the SJW Group transaction is on par with or exceeds the top end of valuations for comparable transactions.
In conceding that it could not match the value delivered through the SJW Group agreement, even Eversource Energy, which submitted an unsolicited, inadequate, below-market $64 per share proposal to acquire Connecticut Water, acknowledged that Connecticut Water shareholders were receiving a "huge premium."4
THE SJW GROUP TRANSACTION ALSO DELIVERS COMPELLING BENEFITS TO
CONNECTICUT WATER'S STAKEHOLDERS
In addition to maximizing value for Connecticut Water's shareholders, the SJW Group transaction provides significant benefits for our employees, customers and communities. Following the close of the transaction, Connecticut Water will continue to be led locally with a New England region headquarters in Connecticut. The same trusted team of passionate, dedicated employees who support our company and operating utilities today will continue to support our company and operating utilities after the transaction closes.
We have proudly made numerous commitments to demonstrate how we will maintain our focus on superior customer service and environmental stewardship with qualified local water professionals continuing to provide safe, reliable water service. Among other things, we have committed to:
| - No layoffs or job cuts as a result of the combination | - No use of Connecticut sources or supplies for the out-of-state sister companies |
| - No changes in customer rates as a result of the combination | - Continue responsible water resource management programs |
| - Continued superior customer service with annual customer satisfaction surveys conducted by an independent consultant | - Funding for our H2O customer assistance program at the same or higher levels than the past three years |
| - ~$200M annual capital investments across combined operations | - Corporate Responsibility Committee will continue to drive efforts to reduce environmental footprint and implement sustainable business practices with annual reporting to the Board of Directors |
| - Community liaisons and outreach efforts in all service towns with at least annual face to face meetings with each town CEO | - Employees will remain active in state and environmental organizations and participate in activities of Water Planning Council, WUCCs and other workgroups or committees to further state water supply and resource policies and planning |
| - Ongoing community investment, support and involvement | |
| - Enhanced environmental stewardship and continued industry leadership on water conservation initiatives with an annual budget for customer oriented conservation programs | |
| - Additional notification and prioritization for open space and conservation for certain company-owned lands |
YOUR VOTE IS IMPORTANT – GO GREEN AND VOTE "FOR" THE COMBINATION WITH SJW GROUP TODAY
By going green and voting "FOR" the SJW Group transaction on the GREEN proxy card, you are voting to receive significant, certain, premium value of $70 per share in cash. You are also voting "FOR" stakeholder benefits that we believe are fundamental to being a successful utility company.
We urge you to vote TODAY "FOR" the proposals related to the SJW Group transaction by phone, Internet or by returning the enclosed GREEN proxy card in the postage paid envelope provided.
On behalf of the Connecticut Water Service Board of Directors, thank you for your continued support of Connecticut Water.
Sincerely,
Carol P. Wallace
Chairman, Connecticut Water Service, Inc. Board of Directors
Connecticut Water shareholders who have questions or would like additional information should contact Connecticut Water's proxy solicitors: Morrow Sodali, toll-free at (800) 662-5200 or by email at CTWS@morrowsodali.com, or MacKenzie Partners, toll-free at (800) 322-2885 or by email at CTWS@mackenziepartners.com.
To learn more about Connecticut Water's transaction with SJW Group and the substantial value and significant benefits it will provide, shareholders are encouraged to visit www.sjw-ctws.com.
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.
