|A Law firm is questioning SJW Group's takeover of Connecticut Water Service, engineerd by former CWS CEO and current SJW CEO Eric W. Thornburg.|
MILWAUKEE,WI: Not everyone is sure that the Connecticut Water Service [Nasdaq: CTWS], is receiving a fair price for its shares in its merger with the SJW Group, [NYSE: SJW, San Jose Water]
The law firm, Ademi & O'Reilly, LLP says it is “investigating the Board of Directors of Connecticut Water Service, Inc. for possible breaches of fiduciary duty and other violations of Connecticut law in connection with the sale of Connecticut Water to SJW.”
The firm allege that “Connecticut Water's long-term financial outlook is improving and yet Connecticut Water shareholders will receive only 1.1375 shares of common stock for each share of Connecticut Water common stock they own, the equivalent of $61.86 per share.”
The firm’s announcement says, “SJW is well aware of Connecticut Water's improving financial metrics and is purchasing Connecticut Water at a substantial discount. The merger agreement unreasonably limits competing bids for Connecticut Water by prohibiting solicitation of any further bids, and imposing a termination penalty should Connecticut Water receive and accept a superior bid.”
“Connecticut Water insiders, their affiliates and other major shareholders own significant voting stock, and will receive millions of dollars as part of change of control arrangements, and therefore can unduly influence a sale of Connecticut Water. Our investigation centers on the conduct of Connecticut Water's Board of Directors, who have unanimously approved the transaction, and whether they are fulfilling their fiduciary duties to all shareholders, and obtaining a fair and reasonable price for Connecticut Water given its current financial condition and prospects.”
SJW’s CEO and chairman, Eric W. Thornburg will be the CEO and chairman of the combined company. Thornburg was CEO of CWS until last September when he resigned to become CEO of SJW.