Mesa Water District Sues to Block Merger Between Two Others

Hoping to block a merger between the Santa Ana Heights Water Co. and Irvine Ranch Water District, Mesa Consolidated Water District filed a lawsuit in Orange County Superior Court this week against Santa Ana Heights and its directors.

Mesa Consolidated alleges in the lawsuit that, because Santa Ana Heights Water Co.’s bylaws prevent the sale of shares given to landowners in Santa Ana Heights, Irvine Ranch’s offer to buy the shares is illegal.

Irvine Ranch General Manager Ronald Young contested the allegations Thursday, saying: “This is a bona fide business deal between IRWD and a private water agency.”

In January, Irvine Ranch made a tender offer of $1,100 a share to shareholders of Santa Ana Heights Water Co.

It announced last week that more than 50% of the company’s shares had been tendered to Irvine Ranch, making it the majority holder.

Mesa Consolidated officials have been vocal in their opposition to the merger, saying they fear eventually being consolidated with Irvine Ranch, if the larger water agency suddenly has a presence in Mesa’s service area.

Furthermore, Mesa Consolidated officials said, if Irvine Ranch takes over Santa Ana Heights, it would gain the right to pump water out of the Orange County ground water basin, putting Mesa’s supply at risk.

Irvine Ranch’s proposal would have to be approved by its directors, Santa Ana Heights directors and the county’s Local Agency Formation Commission, which rules on modifications to government agencies.

In its statement filed with the commission, Mesa Consolidated officials say that their agency is the logical partner for Santa Ana Heights because it has maintained the company’s system for decades.