Connecticut Water Service Inc. and SJW Group amended the terms of their proposed merger to allow for solicitation of alternative proposals, according to a May 31 news release.
Approved by the board of directors of Connecticut Water, the amendment includes a "go-shop" provision permitting the company to actively solicit third-party proposals for an alternative merger, acquisition or other strategic transaction.
"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," Connecticut Water board Chairman Carol Wallace said in the news release.
Connecticut Water and its financial advisers started the solicitation process May 31 and may consider any alternative proposals until 11:59 p.m. E.T. on July 14.
Eversource Energy was invited to participate in the solicitation. However, the Connecticut Water board decided "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."
Connecticut Water's board had previously rebuffed an offer by Eversource Energy to acquire all of its outstanding shares at $63.50 per share in cash or Eversource common shares. Eversource is also headquartered in Connecticut and had acquired another Connecticut-based water utility, Aquarion Water Co.
San Jose, Calif.-headquartered SJW Group rejected an unsolicited proposal by California Water Service Group to acquire all of its issued and outstanding shares for $68.25 per share in cash.
Under the SJW Group/Connecticut Water "merger of equals," Connecticut Water shareholders would receive 1.1375 shares of SJW Group common stock for each share of Connecticut Water. This is the equivalent of $64.72 per share, based on SJW Group's closing share price April 25. At deal close, the combined company would be 40% owned by Connecticut Water shareholders and 60% by SJW Group shareholders on a fully diluted basis.
The board of directors reaffirmed its recommendation to Connecticut Water shareholders to vote in favor of the company's merger with the SJW Group.
Wells Fargo Securities LLC serves as Connecticut Water's financial adviser and Sullivan & Cromwell LLP serves as its legal counsel.
