Lawsuit Seeks to Quash Wisconsin Utility Merger
WICOR Inc., parent of Wisconsin Gas, says it intends to
"vigorously defend" itself against a shareholder class-action
lawsuit that seeks to put the brakes to the company's proposed
acquisition by Wisconsin Energy Corp.
Bennett Halpren, A WICOR shareholder, filed the suit on behalf
of all of the company's shareholders in Milwaukee County (WI)
Circuit Court, claiming the agreed-upon sale price of $1.275
billion in cash and stock was inadequate and would not benefit
shareholders. The lawsuit contends WICOR and its board of directors
breached their fiduciary duties by agreeing to the sale to
Wisconsin Energy and by taking actions that reduced the likelihood
of a third-party bid.
It asked the court to rescind the merger agreement between the
two Milwaukee energy companies and to award other "appropriate"
WICOR and its directors "believe the lawsuit is without
merit...," and remain "committed" to the merger deal with Wisconsin
Energy, said WICOR Chairman and CEO George Wardeberg in a prepared
Wisconsin Energy, a utility holding company, announced on June
28th its intent to acquire WICOR in a transaction that would create
an energy company with a combined market capitalization of about
$7.3 billion. The merger would unite the gas operations of
Wisconsin Energy's combined utility, Wisconsin Electric, with the
state's largest gas distributor, WICOR's Wisconsin Gas. The deal
would not involve the combination of any electric assets.
Also, the acquisition would provide Wisconsin Energy with a
platform for growth in the non-utility sector through WICOR's pump
businesses, which accounted for almost half of the company's
earnings and revenues last year.
Under the terms of merger agreement, WICOR shareholders would
receive a fixed price of $31.50 for each share of stock that they
own, a 12% premium over the opening price of $27.87 for WICOR stock
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