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March 15, 2018

Maine Water parent to merge with California utility, becoming third-largest in U.S.

Courtesy / Connecticut Water Co.
Courtesy / Connecticut Water Co.
The announced merger of Connecticut Water Service Inc. (NASDAQ: CTWS), parent company of Maine Water, with California-based SJW Group in an all-stock transaction would create the third largest water and wastewater utility in the United States, with operations in four states.

Connecticut Water Service Inc. (NASDAQ: CTWS), parent company of Maine Water Co., announced today it plans to merge with California-based SJW Group in an all-stock transaction expected to close by the end of the year.

In what is being described as a "merger of equals," the combined company would become the third-largest investor-owned water and wastewater utility in the United States, with operations in Maine, Connecticut, California and Texas. It would serve more than 1.5 million people and have more than 700 employees.

Under terms of the agreement, Connecticut Water shareholders will receive 1.1375 shares of common stock in SJW Group (NYSE: SJW) for each share of CTWS common stock — the equivalent of $61.86 per share, or about $750 million in aggregate, according to the news release announcing the merger plans. Based on each company's closing share price as of March 14, the combined company would have a pro forma $1.9 billion equity value and a $2.6 billion enterprise value.

Connecticut Water became the largest investor-owned water utility in Maine in 2012 with its $53.5 million purchase of Aqua Maine and $19.8 million purchase of the Biddeford & Saco Water Co., which are both now under the name of Maine Water Co. Maine Water Co. serves more than 32,000 customers, or approximately 85,000 people, in 21 communities across Maine.

How merger might benefit Maine customers

Courtesy / Connecticut Water Service Inc.
Courtesy / Connecticut Water Service Inc.
Connecticut Water Service Inc., headquartered in Clinton, Conn., became Maine's largest investor-owned water utility in 2012.

In a telephone interview with Mainebiz this morning, SJW Group President and CEO Eric W. Thornburg (who previously was CEO of Connecticut Water until his resignation last fall) and Connecticut Water President and CEO David C. Benoit both said the merger would create a larger and stronger company that would be capable of delivering, in Thornburg's words, "greater value and benefits for our shareholders, customers, employees and communities than either company could deliver on its own."

Benoit, who will become president of the company's New England region, said Maine Water's current leadership and employees would remain intact when the merger closes. Likewise, he said, the merged company will proceed Maine Water's $50 million project to build a new water treatment facility near the Saco River in Biddeford, a project that isn't expected to come online until the fall of 2020.

Benoit said the benefit to Maine Water customers of being part of a much larger company, as well as to the customers of the other regions, is the resulting lower cost of capital that translates to savings in major infrastructure projects like the new facility being designed for Biddeford.

"The lower cost of capital ultimately will go to the customers," he said.

Benoit said another benefit to Maine Water's utility operations is the opportunity of leveraging SJW Group's cutting-edge information services and technology systems to replace systems in Maine that are nearing the end of their useful life. Doing so, he said, would "avoid significant" costs that Maine Water would incur if it had to replace those systems solely on its own.

"This transformational merger of equals joins two leading and complementary water utility companies to create significant long-term benefits for shareholders, customers, employees and the communities we serve," Thornburg said. " The combination will establish a premier organization with substantial opportunities for new investment across a diverse set of geographies and an improved ability to serve our customers."

Read more

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SJW Group's merger with Maine Water Co.'s parent is now an all-cash deal

Connecticut Water's merger with SJW Group takes a new twist

Bidding war erupts for Maine Water Co.'s parent firm

Maine Water's parent company rejects unsolicited bid from Eversource Energy

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