CLINTON, Conn., Oct. 2, 2018 /PRNewswire/ -- Connecticut Water
Service, Inc. (NASDAQ: CTWS) today announced that it has filed
definitive proxy materials with the U.S. Securities and Exchange
Commission ("SEC") and is mailing a letter to shareholders in
connection with the Special Meeting of Connecticut Water
Shareholders to vote on the previously announced transaction with
SJW Group (NYSE: SJW). 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.
The Special Meeting will be held at 2:00
p.m. (Eastern Time) on November 16,
2018 at the offices of Connecticut Water, 93 West Main
Street, Building 2, Clinton, CT
06413. Shareholders of record as of the close of business on
September 24, 2018 will be entitled
to vote at the Special Meeting.
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
exceeds Connecticut Water's all-time high closing stock price prior
to the announcement of the revised SJW Group agreement on
August 6, 2018.
- The combined company will operate under local leadership and
local operating teams, with no changes in customer rates and no
transaction-related employee layoffs.
- The transaction creates a national pure-play water company with
a continued focus on operational excellence, superior customer
service, environmental stewardship as well as community investment,
involvement and support.
- Connecticut Water believes the meaningful benefits and
protections for its stakeholders in the SJW Group transaction would
not be available in other potential transactions.
The full text of the letter follows below:
AN IDEAL COMBINATION: CT WATER + SJW
GROUP
YOUR VOTE IS IMPORTANT
GO GREEN AND VOTE
"FOR" THE SJW GROUP TRANSACTION TODAY
VOTE "FOR" SIGNIFICANT, CERTAIN,
PREMIUM VALUE
VOTE "FOR" SUPERIOR CUSTOMER SERVICE,
LOCAL JOBS AND COMMUNITY SUPPORT
VOTE "FOR" CONTINUED INVESTMENTS IN OUR
WATER SYSTEMS
October 2, 2018
Dear Fellow Shareholder,
On November 16, 2018, Connecticut
Water will hold a Special Meeting of Shareholders to consider
the previously announced acquisition of our company by SJW
Group for $70 per share in cash. The
Connecticut Water Service Board of Directors is confident that this
transaction is in the best interests of all Connecticut Water
shareholders as well as those of our employees and the customers
and communities we serve.
Please go green and vote "FOR" the proposal
to approve the SJW Group merger agreement as well as all other
proposals included on the enclosed GREEN proxy card today.
Through this combination, we will deliver significant value to our
shareholders and create many exciting benefits for our customers,
employees and communities.
Your vote is important no matter how many or how few
shares you own, and not voting the GREEN proxy card is the
same as voting against the SJW Group transaction. Please also keep
in mind that the Special Meeting is simply about whether you
support the combination with SJW Group and the benefits it will
provide; it is unrelated to Eversource Energy and its unsolicited
proposal, which we have previously rejected.
A COMPELLING TRANSACTION THAT DELIVERS FULL
VALUE FOR CONNECTICUT WATER
SHAREHOLDERS
Under the terms of our agreement with SJW Group, you will
receive $70 in cash for each share of
Connecticut Water common stock you own. This all-cash consideration
represents significant, certain, premium value for your shares.
Indeed, it:
- Delivers a significant 33% premium to Connecticut
Water's unaffected closing stock price on March 14, 2018 (the last trading day before our
original transaction with SJW Group was announced);
- Exceeds our all-time high closing stock price
(prior to the announcement of the revised SJW Group agreement on
August 6, 2018) of $69.16. Notably, before announcing the original
agreement with SJW Group in March, Connecticut Water had never
closed above $63.55 per share;
and
- Reflects a highly attractive Price-to-Earnings (P/E)
multiple of 30.1x Connecticut Water's earnings per share in
2018E. The consideration you are receiving for the transaction with
SJW Group is at or exceeds the top end of valuation metrics for
comparable transactions.1
MEANINGFUL BENEFITS FOR OUR CUSTOMERS,
EMPLOYEES AND COMMUNITIES
In addition to providing significant value to Connecticut Water
shareholders, the agreement with SJW Group provides important
commitments and benefits to our customers, employees and
communities. These commitments and benefits are distinct from many
other acquisition transactions, reflect our understanding of the
water business and demonstrate the strong commitment that SJW Group
has to Connecticut Water and our stakeholders.
New national leader with scale and strength to invest and
grow: With SJW Group, we are partnering to create a new
leading, national, pure-play water company with a focus on customer
service, reliability, environmental stewardship and employee growth
and development. The combined company will be the 3rd
largest investor-owned water and wastewater utility in the U.S.
based on enterprise value and rate base, serving more than 1.5
million people with approximately 700 employees. Our enhanced
growth platform will reflect our increased scale, geographic
diversity and strong financial foundation, including a credit
profile expected to be consistent with at least an "A-" rating. We
will have the expertise and the strength to continue making
important investments in our local water system infrastructure,
superior service levels, reliability and capital returns.
No change in customer rates: There will be no change in
customer rates as a result of the transaction. Our operating
companies, including Connecticut Water, Maine Water, Avon Water and
Heritage Village Water, will all continue to be subject to
oversight by their respective state regulatory commissions for
rates and quality of service. The combined company is expected to
be able to leverage economies of scale to manage costs and deliver
benefits for our customers going forward while maintaining
commitments to employees and the environment.
Best-in-class customer service: Connecticut Water has
customer satisfaction rankings that consistently exceed
90%.2 For SJW Group, delivering safe, clean
drinking water is also a top priority, and you can expect us to
continue our superior customer service record well into the future
after our transaction has closed.
No transaction-related layoffs: There will be no
layoffs as a result of our agreement – jobs will be protected in
the SJW Group transaction. Each of our operating utilities and
their customers will continue to be supported locally by the
existing team of experienced, dedicated water professionals and
leaders. This means Connecticut Water, Maine Water, Avon Water and
Heritage Village Water customers can continue to count on the
people they know and trust, and employees can continue to count on
a leadership team who values their work and service.
Local headquarters, local leadership, local operating teams
and local brand names: We are pleased that our New England
headquarters as well as our leadership team will remain in
Clinton, CT, with our current
President and CEO, David Benoit,
serving as President of the New England Region. In addition, the
SJW Group Board of Directors will be expanded to include two
current members of the Connecticut Water Service Board. This
reflects SJW Group's belief in our company and its desire to
further bolster the board's expertise in the New England
market.
We will continue to operate as Connecticut Water Service, Inc.,
and each of the Company's current operating subsidiaries will
continue to operate under their existing brand names.
Community investment, involvement and support: In
addition to retaining our dedicated employee teams, we will
maintain strong community ties and participation in community
events and organizations. We will continue to support economic
development with investments in growth, safety and
reliability. In addition, the combined company will honor
commitments for approximately $200
million of annual capital investments across the combined
operations, including a new surface water treatment facility in
Biddeford, ME.
VIGOROUS NEGOTIATIONS, ROBUST GO-SHOP
PROCESS,
NUMEROUS ENGAGEMENT EFFORTS
The shareholder value and stakeholder benefits created by the
SJW Group transaction are the product of vigorous negotiations by
your Board. These negotiations resulted in Connecticut Water
obtaining three significant price increases over SJW Group's
initial proposal as well as meaningful stakeholder benefits that
exceed commitments typical of other acquisition transactions.
To provide Connecticut Water shareholders with absolute
confidence that the SJW Group agreement provides the most value for
Connecticut Water shareholders, your Board conducted a robust
go-shop process. During the 45-day go-shop period, Connecticut
Water, with the assistance of its independent financial advisors,
directly contacted more than 50 parties, including more than 20
water and regulated utilities and more than 30 financial sponsors,
to determine their interest in exploring a potential transaction
with Connecticut Water. No superior proposals or indications of
interest were received.
We note that Eversource was among the parties invited to
participate in our go-shop process. Eversource declined to do so.
We have also tried to engage with Eversource to determine if there
were any paths superior to the SJW Group agreement. Despite our
efforts, Eversource has only reiterated its inadequate,
below-market $64 per share
proposal.
VOTE FOR SIGNIFICANT VALUE, RELIABLE
SERVICE
AND A COMMITMENT TO JOBS AND
COMMUNITIES
VOTE "FOR" THE SJW GROUP TRANSACTION
TODAY
The $70 per share cash consideration in the SJW Group
agreement delivers significant, certain, premium value to our
shareholders that exceeds our all-time high closing stock
price.
We know that many Connecticut
Water shareholders are also our employees, our customers and
members of the communities we serve, and we evaluated the SJW Group
agreement – as well as other opportunities – with these factors in
mind. The SJW Group agreement recognizes the unique responsibility
we have to our stakeholders as a local water utility company with a
focus on public health and service, and we are pleased to have
reached an agreement that delivers on these
considerations.
We believe the meaningful benefits
and protections for our stakeholders in the SJW Group agreement
would not be available in other transactions, including an
acquisition by Eversource, given its history of layoffs, extended
service outages and well-documented record of poor service.
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.
SJW Group and Connecticut Water
are an ideal combination. Accordingly, we urge you to vote
TODAY "FOR" the proposals related to the SJW Group
transaction by phone, Internet or by returning the enclosed proxy
card in the postage paid envelope provided.
Connecticut Water shareholders are
advised to take no action in response to ANY materials they may
receive from Eversource and to DISCARD ALL BLUE proxy cards upon
receipt.
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.
Cautionary Statement Regarding Forward-Looking
Statements
This document contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, as
amended. Some of these forward-looking statements can be
identified by the use of forward-looking words such as "believes,"
"expects," "may," "will," "should," "seeks," "approximately,"
"intends," "plans," "estimates," "projects," "strategy," or
"anticipates," or the negative of those words or other comparable
terminology.
The accuracy of such statements is subject to a number of risks,
uncertainties and assumptions including, but not limited to, the
following factors: (1) the risk that the conditions to the
closing of the transaction are not satisfied, including the risk
that required approval from the shareholders of Connecticut Water
for the transaction is not obtained; (2) the risk that the
regulatory approvals required for the transaction are not obtained,
on the terms expected or on the anticipated schedule; (3) the
effect of water, utility, environmental and other governmental
policies and regulations; (4) litigation relating to the
transaction; (5) the ability of the parties to the transaction
to meet expectations regarding the timing, completion and
accounting and tax treatments of the proposed transaction;
(6) the occurrence of any event, change or other circumstance
that could give rise to the termination of the transaction
agreement between the parties to the proposed transaction;
(7) changes in demand for water and other products and
services of Connecticut Water; (8) unanticipated weather
conditions; (9) catastrophic events such as fires,
earthquakes, explosions, floods, ice storms, tornadoes, terrorist
acts, physical attacks, cyber-attacks, or other similar occurrences
that could adversely affect Connecticut Water's facilities,
operations, financial condition, results of operations, and
reputation; (10) risks that the proposed transaction disrupts
the current plans and operations of Connecticut Water;
(11) potential difficulties in employee retention as a result
of the proposed transaction; (12) unexpected costs, charges or
expenses resulting from the transaction; (13) the effect of
the announcement or pendency of the proposed transaction on
Connecticut Water's business relationships, operating results, and
business generally, including, without limitation, competitive
responses to the proposed transaction; (14) risks related to
diverting management's attention from ongoing business operations
of Connecticut Water; (15) the trading price of Connecticut
Water's common stock; and (16) legislative and economic
developments.
In addition, actual results are subject to other risks and
uncertainties that relate more broadly to Connecticut Water's
overall business and financial condition, including those more
fully described in Connecticut Water's filings with the U.S.
Securities and Exchange Commission (the "SEC"), including, without
limitation, its annual report on Form 10-K for the fiscal year
ended December 31, 2017 and its
quarterly report on Form 10-Q for the period ended June 30, 2018. Forward-looking statements
are not guarantees of performance, and speak only as of the date
made, and neither Connecticut Water nor its management undertakes
any obligation to update or revise any forward-looking statements
except as required by law.
Additional Information and Where to Find It
This communication relates to the proposed acquisition of
Connecticut Water by SJW Group. In connection with the
proposed transaction, on October 2,
2018, Connecticut Water filed a definitive proxy statement
on Schedule 14A and the accompanying GREEN proxy card with the
SEC. SHAREHOLDERS OF CONNECTICUT WATER ARE URGED TO READ THE
DEFINITIVE PROXY STATEMENT AND ALL OTHER RELEVANT DOCUMENTS FILED
OR TO BE FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and
security holders will be able to obtain a copy of the definitive
proxy statement and the other documents filed by Connecticut Water
with the SEC free of charge at the SEC's web site,
http://www.sec.gov, and shareholders of Connecticut Water
will also be able to obtain transaction-related documents free of
charge by directing a request to Connecticut Water's Corporate
Secretary, Kristen A. Johnson, at
Connecticut Water Service, Inc., 93 West Main Street, Clinton, Connecticut 06413, or by telephone at
1-800-428-3985.
Participants in Solicitation
SJW Group and its directors and executive officers, and
Connecticut Water and its directors and executive officers, may be
deemed to be participants in the solicitation of proxies from the
holders of Connecticut Water's common stock in respect of the
proposed transaction. Information about the directors and
executive officers of SJW Group is set forth in the proxy statement
for SJW Group's 2018 Annual Meeting of Stockholders, which was
filed with the SEC on March 6,
2018. Information about the directors and executive officers
of Connecticut Water is set forth in the proxy statement for
Connecticut Water's 2018 Annual Meeting of Shareholders, which was
filed with the SEC on April 6,
2018. Investors may obtain additional information regarding
the interest of such participants by reading the definitive proxy
statement regarding the proposed transaction, which was filed on
October 2, 2018, and other relevant
materials filed with the SEC regarding the proposed
transaction.
Connecticut Water Contacts
Daniel J. Meaney, APR
Director, Corporate Communications
(860) 664-6016
dmeaney@ctwater.com
Investors
Mike Verrechia / Bill Dooley
Morrow Sodali, LLC
(800) 662-5200
CTWS@morrowsodali.com
Dan Burch / Laurie Connell
MacKenzie Partners, Inc.
(800) 322-2885
CTWS@mackenziepartners.com
Media
Joele Frank, Wilkinson Brimmer
Katcher
Barrett Golden / Joseph Sala
(212) 355-4449
1 Reflects implied P/E multiples based on the
acquired companies' equity value and projected next 12 months'
earnings for selected predominately regulated utility transactions
announced in the last three years. Source: CapitalIQ, FactSet,
public filings, investor presentations.
2 Based on customer surveys conducted by an
independent research firm.
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SOURCE Connecticut Water Service, Inc.