SAN JOSE, CA, CLINTON: There is a little more clarity in understanding the cross coastal offer and likelihood the transaction will go forward by San Jose Water for [NYSE: SJW] for the Connecticut Water Service [ NASDAQ: CWS]
The San Jose Water Company has confirmed that it rejected a purchase offer by California Water Service Group also based in San Jose [NASDAQ: CWT] regarding a potential proposal to acquire the company for $68.25 per share in cash a total of approximately $1.4 billion for the company, approximately a 21% premium over the stock price the day before the announcement. In spite of the rejection by the board, investors apparently believe that the purchase will go forward, the stock price having risen to more than $65 per share following the announcement.
San Jose’ Board of Directors in rejecting the local offer claimed that their shareholders would do better with its purchase of Connecticut Water Service, Inc., SJW said that the sale would deny, “the long-term benefits of the merger of equals transaction with Connecticut Water include increased scale, enhanced financial strength and geographic diversity; expected continued payment of dividends over time; anticipated higher future growth profile and associated share price appreciation; the tax-free nature of the merger of equals with Connecticut Water; and significant earnings accretion - all of which the SJW Group Board believes are unique to the proposed merger of equals transaction.”
“We have repeatedly sought to discuss privately our superior proposal with SJW’s Board,” Martin Kropelnicki, California Water Service chief executive officer, said in a prepared release on Thursday. “SJW has refused to engage and just informed us last night that the SJW Board rejected it on April 13, 2018. We are now making our proposal public so stockholders can evaluate it for themselves.”
According to published reports California Water began its pursuit of SJW soon after the SWJ-Connecticut Water deal came to the surface.
“We are confident SJW shareholders will view it as clearly superior to the Connecticut Water transaction and to SJW’s standalone prospects,” Kropelnicki said.
Back home, CTWS has rejected an offer by Eversource for Connecticut Water common stock for $63.50 per share in cash and/or in Eversource common stock at the election of Connecticut Water shareholders. Beyond making public its offer Eversource has not reacted with a next step to the rejection by Connecticut Water Service’s Board.
In the San Jose merger, Eric W. Thornburg would 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.