SJW Group Rejects Unsolicited Non-Binding Indication of Interest from California Water Service Group - Seite 2

J.P. Morgan Securities LLC is serving as financial advisor to SJW Group, and Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel.

The text of SJW Group’s rejection letter to Cal Water follows:

April 25, 2018

California Water Service Group
Attn: Martin A. Kropelnicki and Peter C. Nelson
1720 North First Street
San Jose, California 95112

Dear Messrs. Kropelnicki and Nelson,

We received your unsolicited non-binding indication of interest, dated April 4, 2018, to acquire SJW Group for $68.25 per share in cash. After carefully and thoroughly evaluating your non-binding indication of interest in consultation with our management and legal and financial advisors, the SJW Group Board of Directors has determined that it neither constitutes nor is reasonably likely to lead to a superior proposal as defined in SJW Group’s merger agreement (the “Merger Agreement”) with Connecticut Water Service, Inc. (“Connecticut Water”).

Accordingly, the Board voted unanimously to reject your proposal.

In reaching its determination, as more fully described below, the Board found that your offer of $68.25 per share significantly undervalues SJW Group’s long-term prospects and is not in the best interest of our shareholders. We are enthusiastic about the future prospects of SJW Group, all the more so in light of our pending merger of equals (the “Merger”) with Connecticut Water. We believe the Merger has the potential to create significant long-term value for our shareholders – value that our shareholders would not be permitted to share as part of your proposal.

Upon consummation of the Merger, SJW Group is expected to be the third largest investor-owned water and wastewater utility in the United States. With a strong multi-state presence in Connecticut, Maine, California and Texas, SJW Group will be well-positioned to continue to deliver a robust and stable dividend, highly attractive earnings and growth accretion to our shareholders, who will own approximately 60% of the combined company.

Our Board concluded that your all-cash transaction described in the non-binding indication of interest would not permit our shareholders the opportunity to share in the benefits expected from being shareholders of the combined company with Connecticut Water, including the opportunity to realize the long-term benefits of increased scale, enhanced financial strength and geographic diversity; expected continued payment of dividends over time; anticipated higher future growth profile and associated share price appreciation; and significant earnings accretion – all of which our Board believes are unique to the Merger with Connecticut Water. As a result of all of these factors, the Board believes that the Merger will result in our shareholders having the ability to realize greater long-term value than in your proposed transaction.