The board of directors of NorthWestern Corp. on Tuesday said that the company has reached a definitive agreement with Babcock & Brown Infrastructure (BBI) under which BBI will acquire NorthWestern in an all-cash transaction at $37 per share, valuing NorthWestern at $2.2 billion.
BBI has committed to maintaining existing employee and customer service levels, NorthWestern said. Additionally, NorthWestern will have access to BBI's capital base and experience with the development of new transmission, wind power and coal projects. The transaction will not increase NorthWestern's debt.
BBI and NorthWestern are committed to maintaining strong relationships with the communities and the regulators in Montana, South Dakota and Nebraska, NorthWestern said. BBI has indicated an intention to ensure local management accountability with a focus on a continuation of excellent customer service,
The transaction is subject to the approval of NorthWestern's shareholders and customary regulatory approvals and is expected to be completed in 2007. Upon closing NorthWestern will cease to be a publicly traded company and will become a locally managed subsidiary of BBI.
In mid-2005, following its emergence from a successful reorganization under Chapter 11 and several quarters of improving financial performance, NorthWestern received several informal proposals from parties who were interested in buying the company (see Daily GPI, March 23; Nov, 29, 2005).
NorthWestern's board in November 2005 directed senior management and its financial adviser to commence an evaluation of all strategic alternatives to maximize value for all stockholders.
In connection with the review, NorthWestern identified and invited interested parties, including Montana Public Power (MPPI) and Black Hills Corp., to submit formal proposals to acquire NorthWestern. All interested parties were invited to perform due diligence, and the board's financial adviser and senior management actively engaged with the bidders as they considered their final offers.
The board established an M&A committee of independent directors to oversee the process. After a thorough review and analysis of the final proposals, the board determined that a sale of the Company was the best means of maximizing stockholder value. The board reviewed the most attractive proposals, and in early April had its advisers engage with the interested parties in an effort to obtain the best possible outcome for the company and its stakeholders.
The agreed upon acquisition price represents a 15.3% premium to NorthWestern's share price of $32.09 upon market close April 25, 2006. The transaction will be fully taxable to NorthWestern shareholders.
NorthWestern was advised by Credit Suisse and Manatt, Phelps & Phillips LLP. The Blackstone Group, as financial adviser, rendered a fairness opinion in connection with the transaction to the board of NorthWestern.
BBI is a utility infrastructure company based in Sydney, Australia and is listed on the Australian Stock Exchange. It owns and manages on a long-term basis, utility and infrastructure companies and assets around the world.
BBI owns companies in electricity transmission and distribution, gas transmission and distribution, and transport infrastructure, and has ownership interests in thermal and renewable power generation. BBI's energy sector management are utility executives with an average of more than 25 years experience in the electric and gas transmission and distribution business.
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