(Reuters) - Connecticut Water Service Inc (CTWS.O) said on Thursday it had rejected a $748 million takeover bid by Eversource Energy (ES.N), New England’s largest power utility, aimed at disrupting its merger with SJW Group (SJW.N) agreed in March.
Eversource’s offer, first reported by Reuters earlier on Thursday, came as utilities are turning to mergers and acquisitions to lower costs and help fund investment to upgrade aging infrastructure.
Eversource made the offer of $63.50 per share in cash and stock on April 5, it said in a statement. Connecticut Water Service’s all-stock merger with SJW was valued at $61.86 per share in March, but the deal is worth $63.70 per share after a rise in SJW shares.
A merger with SJW would create a $1.9 billion utility with customers in California, Connecticut, Maine and Texas. SJW shareholders would hold 60 percent of the combined company.
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.
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.
Eric Thornberg, SJW’s chief executive since November, had served as CEO of Connecticut Water Service for 10 years.
SJW said it remained committed to the existing merger with Connecticut Water Service and that the deal remained on track to close by the end of the year.
Connecticut Water Service serves more than 425,000 people across Connecticut and Maine, and more than 3,000 wastewater customers in Southbury, Connecticut.
Eversource transmits and delivers electricity and natural gas and supplies water to about 4 million customers in Connecticut, Massachusetts and New Hampshire.
SJW, based in San Jose, California, provides water to more than one million people in San Jose, California and nearby communities and in Canyon Lake, Texas and nearby communities.
If Eversource clinches a deal with Connecticut Water Service, that would be its second water utility acquisition in the last 18 months. In June, it completed the purchase of Aquarion Water Company for $1.68 billion.
Aquarion, which operates in Connecticut, Massachusetts and New Hampshire, would be highly complementary to Connecticut Water Service’s footprint in Connecticut and Maine, Eversource said in a statement.
Reporting by Greg Roumeliotis and David French in New York; Editing by Lisa Shumaker and Richard Chang