WICOR Inc., parent of Wisconsin Gas, says it intends to”vigorously defend” itself against a shareholder class-actionlawsuit that seeks to put the brakes to the company’s proposedacquisition by Wisconsin Energy Corp.

Bennett Halpren, A WICOR shareholder, filed the suit on behalfof all of the company’s shareholders in Milwaukee County (WI)Circuit Court, claiming the agreed-upon sale price of $1.275billion in cash and stock was inadequate and would not benefitshareholders. The lawsuit contends WICOR and its board of directorsbreached their fiduciary duties by agreeing to the sale toWisconsin Energy and by taking actions that reduced the likelihoodof a third-party bid.

It asked the court to rescind the merger agreement between thetwo Milwaukee energy companies and to award other “appropriate”damages.

WICOR and its directors “believe the lawsuit is withoutmerit…,” and remain “committed” to the merger deal with WisconsinEnergy, said WICOR Chairman and CEO George Wardeberg in a preparedstatement.

Wisconsin Energy, a utility holding company, announced on June28th its intent to acquire WICOR in a transaction that would createan energy company with a combined market capitalization of about$7.3 billion. The merger would unite the gas operations ofWisconsin Energy’s combined utility, Wisconsin Electric, with thestate’s largest gas distributor, WICOR’s Wisconsin Gas. The dealwould not involve the combination of any electric assets.

Also, the acquisition would provide Wisconsin Energy with aplatform for growth in the non-utility sector through WICOR’s pumpbusinesses, which accounted for almost half of the company’searnings and revenues last year.

Under the terms of merger agreement, WICOR shareholders wouldreceive a fixed price of $31.50 for each share of stock that theyown, a 12% premium over the opening price of $27.87 for WICOR stockyesterday.

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