Simsbury Customers Notified That Avon Water Company and Connecticut Water Service are Joining Forces

AVON, CT — The Avon Water Company and Connecticut Water Service, Inc. on Wednesday announced a merger.

The parties have reached an "agreement" for Avon Water Company to "join" Connecticut Water, officials from the two utilities said.

According to Connecticut Water President Robert W. Wesneski, Connecticut Water will, "continue Avon Water Company’s long tradition of providing excellent service to customers."

He added, “Our experienced team of employees will continue to serve their local customers and communities as part of Connecticut Water with access to support from Connecticut Water’s team of experienced water professionals. Connecticut Water is a highly regarded water utility company with a strong record of customer service, investment in infrastructure and stewardship of the environment.”

Eric W. Thornburg, President and CEO of Connecticut Water said, “We are eager to have Avon Water Company join with Connecticut Water. Avon Water is widely viewed as a premier small water utility in the state and has an excellent reputation for quality and effectiveness among customers, regulators and local officials. Customers will benefit by being part of a larger, regional company, which has a size and presence that provides for operational efficiencies, greater purchasing power, and other economies of scale which can drive long term cost savings.”

Thornburg continued, “We are also pleased that Bob Wesneski will remain in his leadership role, ensuring continuity of operations and strong relationships with local community leaders.”

Avon Water Company serves about 4,800 customers in the Farmington Valley communities of Avon, Farmington, and Simsbury, and is located near Connecticut Water’s existing operations in Avon and Farmington.

The agreement provides for the payment of stock consideration valued at about $26.2 million and a cash payment of $6.2 million for a total payment to shareholders of $32.4 million, according to Connecticut Water officials.

Holders of Avon Water Company common stock will receive 80 percent of the transaction consideration in the form of shares of Connecticut Water common stock in a tax-free exchange, utility officials said.

The transaction reflects a total enterprise value of approximately $36.6 million, with the $32.4 million paid to shareholders and the assumption by Connecticut Water of approximately $4.2 million in long-term debt for Avon Water Company, utility officials said.

The transaction will require an approval vote by the shareholders of Avon Water Company and approval by the Connecticut Public Utilities Regulatory Authority and the Maine Public Utilities Commission, which have jurisdiction over areas the utility serves.

The parties plan to file applications with both PURA and the MPUC in the fourth quarter of 2016 with an anticipated closing by April 2017, utility officials said.

Upon receipt of regulatory approval and the closing of the transaction, the company will maintain its separate corporate existence and current name, Avon Water Company. At the closing, Avon Water will become a wholly owned subsidiary of CTWS and a sister company to Connecticut Water and Maine Water. The transaction will not affect the rates or service for any of those water company customers.

This is the second agreement announced in 2016 of a regulated Connecticut water and/or wastewater utility joining CTWS. Less than 6 months ago, on May 10, CTWS announced that it had reached an agreement to purchase the Heritage Village Water Company (“HVWC”). HVWC serves 4,700 water and 3,000 wastewater customers in the communities of Middlebury, Oxford and Southbury. A final PURA decision on that acquisition is expected in early December with an anticipated closing by the end of the year.

With the addition of these two companies, CTWS will have grown its customer base by more than 45 percent since 2011 through acquisitions in Connecticut and Maine, with HVWC and AWC combined representing 8 percent customer growth for the company. CTWS will now serve more than 132,000 water customers, or more than 450,000 people in 80 communities across Connecticut and Maine.

Connecticut Water Service, Inc. is one of the 10 largest shareholder-owned water utilities in the country with a market capitalization of more than $550 million. Its stock trades on the NASDAQ Global Select Market under the ticker symbol CTWS.

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