In an effort to further pave the way for their merger, AGL Resources and NUI Corp. said on Tuesday they reached a settlement agreement with Green Meadows Partners LLP regarding a shareholder class action lawsuit filed by Green Meadows against NUI, its board and AGL last month.

Green Meadows alleged that NUI’s directors agreed to sell the company to AGL “primarily because of the substantial personal benefits they will obtain if the sale agreement is consummated.”

AGL said that although it believes the Green Meadow lawsuit is without merit, the company also believes that litigation could delay its purchase of NUI and could create uncertainty regarding its ability to consummate the acquisition.

As part of the settlement, NUI has agreed to provide shareholders with detailed information regarding corporate strategy and discussions with financial advisors prior to their merger agreement in July.

On July 15, Atlanta-based AGL announced plans to expand its East Coast utility footprint by taking on the assets of the financially and legally devastated Bedminster, NJ-based NUI in a merger agreement valued at about $691 million, including $220 million in cash and the rest in debt assumption. The agreement calls for AGL to pay $13.70 per share for NUI’s outstanding shares (see NGI, July 19).

Green Meadows said the $13.70/share price ultimately agreed upon was less than a $14/share bid made by another company and by AGL at an earlier point in the negotiations. The lawsuit also alleged that many of NUI’s senior officers and directors “stand to receive compensation in the form of change in control payments and indemnification agreements beyond what the public shareholders of NUI will receive in connection with the sale agreement.”

The settlement calls for NUI to provide certain additional information and disclosures to shareholders, as reflected in the “Additional Disclosure” section of NUI’s proxy statement supplement filed Tuesday with the Securities and Exchange Commission. The company also agreed to provide additional information relating to the following:

This additional information was mailed to shareholders last week and also was filed by the company last Tuesday with the SEC as additional definitive proxy materials under Schedule 14A.

In addition, as part of the settlement, NUI and AGL will consent to a settlement class that consists of persons holding shares of NUI common stock at any time from July 15 until the date on which the acquisition is consummated, and AGL will pay plaintiff’s attorney’s fees and costs in the amount of $285,000, with payment of such fees subject to final court approval of the settlement and such fees and costs, and consummation of the acquisition. No part of these attorney’s fees or costs will be paid out of funds that would otherwise have been paid to NUI’s shareholders. The settlement is contingent upon final court approval and the consummation of the acquisition of NUI by AGL. AGL expects the deal to be completed some time between December and next March.

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