Water Utility Shoots Down $748M Takeover Bid
By Sara Jerome,
@sarmje
New England’s largest power utility attempted to acquire Connecticut Water Service, but the water provider blocked the deal.
Connecticut Water Service announced it has “rejected a $748 million takeover bid by Eversource Energy, New England’s largest power utility, aimed at disrupting its merger with SJW Group agreed in March,” Reuters reported.
The backdrop is that water utilities are increasingly viewing mergers and acquisitions as a way to confront cost challenges and improve infrastructure, Reuters reported.
“Connecticut Water Service said its board had decided that Eversource’s offer was inferior to SJW‘s. It said SJW offered a significant premium, attractive earnings accretion, a robust dividend and benefits for customers,” Reuters reported.
“The Clinton, Connecticut-based utility also questioned Eversource management’s track record, noting that its own team had delivered a 154 percent total return to shareholders over the last five years, compared to only 57 percent for Boston-based Eversource,” the report continued.
SJW Water and Connecticut Water plan to create a $1.9 billion water utility, Reuters reported.
“The combined company will have an equity value of around $1.9 billion and 1.5 million customers in four states: California, Connecticut, Maine and Texas. Mergers and acquisitions in the water utility space offer providers increased scale and efficiency, at a time when new investment is needed to improve infrastructure and water usage has been broadly falling -- in particular in California, which has experienced severe drought conditions in recent years,” the report stated.
Eversource Energy finalized its purchase of New England’s Aquarion Water Company in June for $1.68 billion, Reuters reported. The deal prompted Eversource to call itself “the first US-based electric utility with a water utility,” Bloomberg reported.