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Lawsuit Seeks to Quash Wisconsin Utility Merger

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" damages.

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 statement.

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 yesterday.

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