The Choice is Clear: Concrete Value Creation vs. Illusory Value
SAN JOSE, Calif. -- (Business Wire)
SJW Group (NYSE: SJW) today announced that its Board of Directors will
be sending a letter to its fellow SJW Group stockholders regarding SJW
Group’s Merger of Equals with Connecticut Water Service, Inc. (NASDAQ:
CTWS) (“Connecticut Water”). The letter, which is included below, urges
stockholders to consider the facts regarding SJW Group’s merger of
equals with Connecticut Water.
Dear Fellow Stockholders,
We are excited about the progress we have made towards completing the
merger of equals with Connecticut Water Service, Inc. (“Connecticut
Water”), which is expected to close during the fourth quarter of 2018.
We have already achieved significant momentum toward closing, including
important federal anti-trust clearance, the filing of our applications
with Connecticut and Maine public utility regulators, and progress in
merger integration and transition planning. Our combined company will
have the scale, geographic diversity, and financial strength to deliver
what we believe will be immediate and long-term
value to our stockholders.
In the near future, you will be asked to vote at a Special Meeting of
Stockholders to support our merger with Connecticut Water. This proposed
combination of our two companies deserves your support. In addition to
generating attractive value for stockholders, the merger will provide
significant benefits to customers, all employees and the communities
that we serve.
As you might have heard, California Water Service Group (“Cal Water”)
has made an unsolicited, non-binding indication of interest to acquire
our company for $68.25 per share in cash. Our Board of Directors
carefully evaluated the non-binding indication and unanimously rejected
it as neither a superior proposal nor reasonably likely to lead to a
superior proposal. The Board also unanimously reaffirmed its commitment
to the merger of equals with Connecticut Water. Now, Cal Water has
embarked upon an expensive and ill-advised campaign to break up our
merger of equals by asking you to vote against the transaction.
Here are the facts.
Our merger of equals with Connecticut Water offers meaningful
opportunities to generate not only immediate shareholder value, but
value well into the future through:
-
Highly attractive earnings and growth accretion.
-
Demonstrated track records by both companies of producing meaningful
total shareholder return (share price appreciation + dividends).
-
A strong balance sheet that enhances financial flexibility to increase
growth.
-
A solid credit profile that supports future share repurchase.
-
Enhanced equity value from the formation of a leading pure play
national water company.
-
Continued investment in a company that cares about the environment for
our communities, customers and employees.
In contrast, Cal Water’s inferior non-binding indication asks you to
forgo these compelling opportunities. How? Under Cal Water’s non-binding
indication you would receive cash for your stock. That means you would
no longer be an SJW Group stockholder and would have no
opportunity to share in what we believe is a very bright
future for our company. By comparison, the substantial ongoing benefits
that will only be available to stockholders in our stock-for-stock
merger of equals with Connecticut Water far outweigh Cal Water’s
non-binding indication.
Since Cal Water’s non-binding indication is cash-for-stock, it would be
a taxable transaction for SJW Group stockholders.1 For many
stockholders, once you pay taxes on the transaction, you will have less
than $68.25 per share. In contrast, our merger of equals with
Connecticut Water is anticipated to be not taxable.
Here’s an example: Assuming a stockholder has held SJW Group stock for
15 years, that stockholder would have acquired the shares for around $14
each. After paying up to 20 percent capital gains tax on the difference
between Cal Water’s $68.25 per share and the $14 per share cost basis,
the stockholder could be left with only $57 or so in cash per share.
Over the past 15 years, SJW Group stockholders have enjoyed a dividend
that has increased every year. In fact, SJW
Group has paid its stockholders a dividend for the last 74 consecutive
years and has increased its annual dividend in each of the last 50 years.
Given our dividend track record, we believe SJW Group stockholders are
best served by the proposed merger with Connecticut Water rather than
trying to find another company in which to invest the money they would
have left after paying taxes on the Cal Water non-binding indication.
Clearly, we believe the merger of equals with Connecticut Water remains
the best choice for SJW Group and its stockholders. This is really a
choice between a concrete value-creation
opportunity represented by the merger of equals with
Connecticut Water versus illusory value and
foregone opportunities if you believe Cal Water.
In the near future, we will be sending you a detailed proxy statement
describing our proposed merger of equals with Connecticut Water along
with a GREEN proxy card. You should read the material carefully.
We urge you to vote on the GREEN card FOR all proposals
related to our merger of equals with Connecticut Water. If you receive
any materials from Cal Water, there is no need for action on your part.
We recommend that you recycle the white cards and any materials you
might receive from Cal Water.
Sincerely,
The SJW Group Board of Directors
If you have any questions please call our proxy solicitors:
Georgeson
LLC
William Fiske / Edward Greene
212-440-9800; 866-357-4029, SJW@Georgeson.com
Forward Looking Statements
This document contains forward-looking statements within the meaning of
the Private 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
approvals from the shareholders of Connecticut Water or the shareholders
of SJW Group for the transaction are not obtained; (2) the risk that the
regulatory approvals required for the transaction are not obtained, or
that in order to obtain such regulatory approvals, conditions are
imposed that adversely affect the anticipated benefits from the proposed
transaction or cause the parties to abandon the proposed transaction;
(3) the risk that the anticipated tax treatment of the transaction is
not obtained; (4) the effect of water, utility, environmental and other
governmental policies and regulations; (5) litigation relating to the
transaction; (6) uncertainties as to the timing of the consummation of
the transaction and the ability of each party to consummate the
transaction; (7) risks that the proposed transaction disrupts the
current plans and operations of Connecticut Water or SJW Group; (8) the
ability of Connecticut Water and SJW Group to retain and hire key
personnel; (9) competitive responses to the proposed transaction; (10)
unexpected costs, charges or expenses resulting from the transaction;
(11) potential adverse reactions or changes to business relationships
resulting from the announcement or completion of the transaction; (12)
the combined companies’ ability to achieve the growth prospects and
synergies expected from the transaction, as well as delays, challenges
and expenses associated with integrating the combined companies’
existing businesses; and (13) legislative and economic developments.
These risks, as well as other risks associated with the proposed
transaction, are more fully discussed in the joint proxy
statement/prospectus that is included in the Registration Statement on
Form S-4 that has been filed with the Securities and Exchange Commission
(“SEC”) in connection with the proposed transaction.
In addition, actual results are subject to other risks and uncertainties
that relate more broadly to SJW Group’s overall business, including
those more fully described in SJW Group’s filings with the SEC,
including its annual report on Form 10-K for the fiscal year ended
December 31, 2017, and Connecticut Water’s overall business and
financial condition, including those more fully described in Connecticut
Water’s filings with the SEC, including its annual report on Form 10-K
for the fiscal year ended December 31, 2017. Forward looking statements
are not guarantees of performance, and speak only as of the date made,
and neither SJW Group or its management nor Connecticut Water or its
management undertakes any obligation to update or revise any
forward-looking statements.
Additional Information and Where to Find It
In connection with the proposed transaction between SJW Group and
Connecticut Water, on April 25, 2018, SJW Group filed with the SEC a
Registration Statement on Form S-4 that includes a joint proxy statement
of SJW Group and Connecticut Water that also constitutes a prospectus of
SJW Group. These materials are not yet final and will be amended. SJW
Group and Connecticut Water may also file other documents with the SEC
regarding the proposed transaction. This document is not a substitute
for the joint proxy statement/prospectus, Form S-4 or any other document
which SJW Group or Connecticut Water may file with the SEC. INVESTORS
AND SECURITY HOLDERS OF SJW GROUP AND CONNECTICUT WATER ARE URGED TO
READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS
AND ALL OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH
THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS,
CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED
MATTERS. Investors and security holders may obtain free copies of
the Form S-4 and the joint proxy statement/prospectus and other
documents filed with the SEC by SJW Group and Connecticut Water through
the website maintained by the SEC at www.sec.gov.
Copies of documents filed with the SEC by SJW Group are available free
of charge on SJW Group’s investor relations website at https://sjwgroup.com/investor_relations.
Copies of documents filed with the SEC by Connecticut Water are
available free of charge on Connecticut Water’s investor relations
website at https://ir.ctwater.com/.
No Offer or Solicitation
This communication is for informational purposes only and is not
intended to and does not constitute an offer to sell, or the
solicitation of an offer to subscribe for or buy, or a solicitation of
any vote or approval in any jurisdiction, nor shall there be any sale,
issuance or transfer of securities in any jurisdiction in which such
offer, sale or solicitation would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction. No
offer of securities shall be made except by means of a prospectus
meeting the requirements of Section 10 of the Securities Act of 1933, as
amended, and otherwise in accordance with applicable law.
Participants in the Solicitation
SJW Group, Connecticut Water and certain of their respective directors
and officers, and other members of management and employees, may be
deemed to be participants in the solicitation of proxies from the
holders of SJW Group and Connecticut Water securities in respect of the
proposed transaction. Information regarding SJW Group’s directors and
officers is available in SJW Group’s annual report on Form 10-K for the
fiscal year ended December 31, 2017 and its proxy statement for its 2018
annual meeting dated March 6, 2018, which are filed with the SEC.
Information regarding Connecticut Water’s directors and officers is
available in Connecticut Water’s annual report on Form 10-K for the
fiscal year ended December 31, 2017, and its proxy statement for its
2018 annual meeting dated April 6, 2018, which are filed with the SEC.
Investors may obtain additional information regarding the interest of
such participants by reading the Form S-4 and the joint proxy
statement/prospectus and other documents filed with the SEC by SJW Group
and Connecticut Water. These documents are available free of charge from
the sources indicated above.
1 All stockholders’ tax situations are different. We advise
you to consult with your tax advisor.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180511005147/en/
Contacts:
Investors
SJW Group
Andrew Walters, 408-279-7818
Chief
Administrative Officer
andrew.walters@sjwater.com
or
Georgeson
LLC
William Fiske / Edward Greene
212-440-9800; 866-357-4029
SJW@Georgeson.com
or
Media
SJW
Group
Jayme Ackemann, 408-918-7247
Director, Corporate
Communications
jayme.ackemann@sjwater.com
or
Abernathy
MacGregor
Ian Campbell, 213-630-6550,
idc@abmac.com
or
Chuck
Dohrenwend, 212-371-5999,
cod@abmac.com
or
Kendell
Moore, 212-371-5999,
kem@abamac.com
Source: SJW Group
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