SJW eyes chunky equity offering to finance CTWS buy

Published August 9th, 2018

SJW Group expects to issue up to $550 million of equity to finance the purchase of Nasdaq-listed Connecticut Water (CTWS), after revising the terms of the merger earlier this week to an all-cash offer which values CTWS at $1.1 billion.

The deal will create the third-largest publicly traded regulated water utility in the US, with an enterprise value of $3 billion, whilst creating a bi-coastal growth platform with hubs in California and Connecticut.

While the deal has been mooted since before CTWS’s former CEO Eric Thornburg took the helm at SJW last year, it was complicated by a rival bid for CTWS from Eversource Energy, and an unsolicited approach for SJW by California Water Service.

The fact that CTWS shares rose 9% on the news – to within a whisker of the $70-per-share offer price – suggests that the market finally believes this is the deal that will end up going through.