California Water Service Group Files Preliminary Proxy Materials to Urge SJW Group’s Stockholders to Vote Against Proposed Merger with Connecticut Water
Reaffirms Commitment to its All-Cash Proposal to Combine with
“We strongly believe our
Mr. Kropelnicki continued, “We believe the SJW Board would better serve its stockholders by immediately meeting with us to discuss our proposal, instead of continuing its emerging pattern of communication and governance practices that hurt their stockholders, employees, customers, and local communities. We stand ready to address directly with the SJW Board any legitimate issue it may have with our all-cash proposal.”
Absent engagement by the SJW Board, California Water will ensure that SJW stockholders have all of the facts and resources necessary to determine the best path forward for SJW. California Water is communicating closely with employees, customers, and local communities to outline the significant benefits the Company believes this common sense combination with California Water would provide. For more information on the many benefits of California Water’s proposal, please visit http://www.SJWValue.com.
In its preliminary proxy materials, California Water highlighted the benefits of its proposal for SJW stockholders, including the following:
- SJW stockholders would receive in our view superior and immediate
economic value with California Water’s all-cash proposal, which
exceeds SJW’s all-time high closing share price, represents a 30%
premium to SJW’s closing stock price at the time of California Water’s
April 4, 2018proposal, and represents a 20% premium to SJW’s closing stock price on April 25, 2018, the day before the California Water proposal was announced.
- In our view, California Water offers a clear path to completing the transaction in a timely manner. California Water’s proposal is not subject to any financing contingency and the Company is confident it can move quickly to conduct due diligence, reach a definitive agreement, and obtain regulatory approvals.
California Water strongly believes that the SJW all-stock merger with Connecticut Water is clearly inferior for SJW stockholders. For example, in California Water’s opinion:
- If the Connecticut Water merger is completed, SJW stockholders would be forced to wait for uncertain benefits that, by SJW’s own admission, would not fully accrue until the long term, while bearing the substantial execution risks associated with operating two separate systems located 3,000 miles apart in different regulatory environments. In contrast, California Water’s proposed transaction offers substantial and certain value to SJW stockholders.
- SJW would be led by a Board and CEO who are largely unfamiliar with
San Josecommunity and the unique challenges of running a California-based water utility. Six out of 12 directors for the new SJW/Connecticut Water Board would come from Connecticut Water – five are current Connecticut Water directors and the sixth is SJW’s brand new Chairman and CEO, Eric Thornburg, who ran Connecticut Water for more than 11 years, until late last year.
- The completion of the Connecticut Water transaction is uncertain given Eversource Energy’s pending bid for Connecticut Water and the need for a 2/3 vote of Connecticut Water shareholders.
- The SJW/Connecticut Water transaction faces regulatory approval in
the same number of jurisdictions as the California Water proposal. SJW
has cited regulatory approval as a reason for rejecting the
CaliforniaWater proposal; however, it then acknowledges the Connecticut Water transaction also requires regulatory approval in two different states – Connecticutand Maine. Regulators in these states have no existing relationships with SJW and may well have concerns approving a transaction in which the acquiring company is located in California3,000 miles away.
In its preliminary proxy materials, California Water urges SJW stockholders to vote against the Connecticut Water merger by:
- Voting “AGAINST” the proposal to approve the issuance of shares of SJW common stock to Connecticut Water shareholders pursuant to the merger;
- Voting “AGAINST” the proposal to adopt the SJW certificate of incorporation amendment; and
- Voting “AGAINST” the proposal to approve any motion to adjourn the SJW special meeting.
California Water remains fully committed to its proposed combination with SJW, with the goal of working collaboratively with SJW to reach an agreement.
This news release contains forward-looking statements within the meaning
established by the Private Securities Litigation Reform Act of 1995
(“Act”). The forward-looking statements are intended to qualify under
provisions of the federal securities laws for “safe harbor” treatment
established by the Act. Forward-looking statements are based on
currently available information, expectations, estimates, assumptions
and projections, and management’s judgment about the Company, the water
utility industry and general economic conditions. Such words as would,
expects, intends, plans, believes, estimates, assumes, anticipates,
projects, predicts, forecasts or variations of such words or similar
expressions are intended to identify forward-looking statements. The
forward-looking statements are not guarantees of future performance.
They are subject to uncertainty and changes in circumstances. Actual
results may vary materially from what is contained in a forward-looking
statement. Factors that may cause a result different than expected or
anticipated include, but are not limited to: the failure to consummate
the proposed transaction with SJW upon the terms set forth in
Important Additional Information
Participants in the Solicitation
California Water, its directors and certain of its officers and
employees may be deemed to be participants in any solicitation of
Thomas Smegal, 408-367-8200
Innisfree M&A Incorporated
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Sard Verbinnen & Co
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