Eversource increases offer to acquire Connecticut Water

Eversource Energy has boosted what it is offering shareholders of Connecticut Water Service in its bid to acquire the Clinton-based utility.

Both companies confirmed on Friday that discussions about Eversource’s acquiring Connecticut Water have continued both in writing and in person throughout late June and since the Fourth of July holiday. But David Benoit, president and chief executive officer of Connecticut Water, said Friday that Eversource’s latest offer of $64 per share in either cash or Eversource shares is well below what his board of directors would consider to be a serious offer.

“We are not simply closing the door on Eversource or any other offer that might be out there,” Benoit said. “On July 7, we indicated to them that

$69.50 per share would get serious consideration from our board.”

That figure, he said, represents a 32 percent premium on what Connecticut Water’s stock was trading at on March 14, the day before the utility announced it was entering into a merger of equals with Californiabased SJW Group. Connecticut Water shareholders are being offered the equivalent of $61.86 per share by SJW Group.

A little more than a month after SJW Group’s offer, Eversource countered with a proposal of its own, offering $63.50 a share in cash and/or Eversource common shares to Connecticut Water shareholders

Benoit said there are some “unique advantages” to the SJW that are nonfinancial and aren’t available in the Eversource offer.

“But at that level ($69.50 per share), we could begin to give serious consideration to Eversource,” he said.

James Judge, Eversource’s chairman, president and chief executive officer, told Benoit in a letter sent on Wednesday that the deal with SJW Group “has questionable benefits for all

constituents.”

“We continue to struggle to envision the synergies required to justify your valuation ask that would be derived from combining two utilities on opposite sides of the country,” Judge said.

Eversource officials say whether the deal with SJW Group is called off and Connecticut Water isn’t required to pay any financial penalties for the merger coming to an end, the Hartford-based company would sweeten its offer by increasing it to $66 per share.

To sweeten the deal even further, Eversource officials are offering Connecticut Water shareholders what is being called a “ticking fee.” The provision involves Eversource paying an additional 50 cents per share increase in the value of the deal if Eversource is unable to achieve all of the regulatory approvals it needs to complete the transaction within 8 months of a deal with Connecticut Water being announced.

Eversource officials say their offer is also beneficial to Connecticut Water customers and the community at large. The offer includes:

A base rate freeze for customers through 2022.

The doubling of Connecticut Water’s charitable contributions to the communities it serves.

Retention of key executives and employees.

Carol P. Wallace, chairwoman of Connecticut Water’s board, said in a statement that Eversource officials have “failed to engage with us in a meaningful way and has not materially modified its proposal.”

“Absent a full and fair proposal or any indication from Eversource that it is willing to make such a proposal, there is no basis for further discussions with Eversource,” Wallace said.

Benoit