Drama in the water utilities sector took a new twist when California Water Service Group approached SJW Group shareholders directly to acquire the company at $68.25 per share in a cash tender offer.
SJW's board of directors has already turned down the Cal Water offer, but the largest water utility in California on June 7 made a bold attempt to acquire its neighboring utility by asking SJW shareholders to sell their shares at a price that exceeds the all-time high closing share price. The buyout offer represented a 30% premium to SJW's share price at the time of California Water's proposal.
In a separate news release, the SJW board requested its shareholders not engage in the tender offer. The board "has not made any determination as to whether the offer constitutes, or could reasonably be expected to lead to, a superior proposal under the terms of SJW Group's merger agreement with Connecticut Water," SJW said, referring to its proposed merger of equals with Connecticut Water Service Inc.
Under the merger plan, filed with the Connecticut Public Utilities Regulatory Authority and the Maine Public Utilities Commission, SJW's Hydro Sub Inc. will merge into Connecticut Water, with Connecticut Water surviving as a subsidiary of SJW. The plan also entails a change of name for the parent company from SJW Group within two years from the completion of merger.
Connecticut Water said June 8 that Connecticut regulators had submitted a draft ruling dismissing the joint merger application because of an amendment to the merger agreement allowing for solicitation of alternative proposals. 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. Despite the solicitation for other offers, Connecticut Water has been fending off overtures from Eversource Energy.
Connecticut Water and SJW have called for special shareholders meeting to vote on the merger agreement in the coming months.
