June 18, 2018

No new bidders, so Maine Water's parent proceeds with merger plans

Courtesy / Connecticut Water Co.
Courtesy / Connecticut Water Co.
Connecticut Water Service Inc. (NASDAQ: CTWS), parent company of Maine Water Co., and California-based SJW Group, announced today that they are proceeding with their "merger of equals" after no alternate proposals were submitted during a 45-day "go shop" period that ended last week.

Connecticut Water Service Inc., parent company of Maine Water Co., announced today that its merger plans with California-based SJW Group (NYSE: SJW) will proceed after its "go-shop" deadline passed with no new proposals or expressions of interest being submitted.

The Clinton, Conn.-based company (NASDAQ: CTWS) said in a news release today that its 45-day solicitation of proposals for an alternative merger, acquisition or other strategic transaction included reaching out to more than 50 parties, including more than 20 water and regulated utilities and more than 30 financial sponsors, to see if they were interested in exploring a potential transaction with Connecticut Water.

Half sought and received additional details, but none submitted a non-binding proposal by the June 13 deadline.

Eversource Energy (NYSE: ES), which had announced on April 27 a competing $750 million bid to derail Connecticut Water's proposed merger with SJW Group, did not respond to its "go-shop" solicitation, according to Connecticut Water's news release.

"Given the absence of any alternative proposal submitted during the go-shop process, the Connecticut Water board of directors has unanimously determined to conclude the go-shop process and has unanimously reaffirmed its support for the SJW Group merger, which it believes is in the best interests of all Connecticut Water shareholders as well as the employees, customers and communities Connecticut Water serves," according to the company's news release.

Carol Wallace, chairman of Connecticut Water's board of directors, said the company now plans to seek approval from shareholders and regulators to approve what she called "our value-enhancing merger with SJW Group as planned."

Wallace noted that Eversource's $63.50 per share proposal made in April is below the $64.72 per share offer that Connecticut Water's shareholders would receive through the SJW Group merger.

As first announced in March, the merger between Connecticut Water and SJW Group in an all-stock transaction is expected to close by the end of the year.

If successfully completed, 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.

How merger would impact Maine

In a March 15 conference call interview with Mainebiz, 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 said Maine Water's current leadership and employees would remain intact when the merger closes.

Likewise, Benoit said, the merged company will proceed with 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.

Maine Water serves nearly 32,000 customers, which is about 80,000 residents in 21 Maine communities. It has 70 employees and 11 water treatment facilities in Maine.

Read more

Vote on Maine Water Co.'s parent firm's merger set for Nov. 16

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


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