Two months after it set the plan in motion, Kansas City, MO-based UtiliCorp United said that it has received all approvals necessary for the company’s exchange offer under which it plans to acquire all of the outstanding publicly held Class A common shares of its 80%-owned subsidiary, Aquila Inc. UtiliCorp first announced the strategy in early November, citing recent significant changes in the merchant energy sector, the general economy and the impact of these changes on the capital markets.” (see Daily GPI, Nov. 8, 2001).

Aquila was originally spun off from UtiliCorp in an IPO last April (see Daily GPI, April 25). Its stock closed the first day of trading at $27.90. On Friday it was trading between $17 and $18.

UtiliCorp noted the offer is subject to the tender of a majority of the publicly held Aquila shares by Aquila stockholders other than UtiliCorp’s directors and executive officers prior to the 5:00 p.m. (EST) Friday Jan. 4 deadline. The company said it expects the exchange offer to be successfully completed. On the morning of Friday Jan. 4, the Delaware Chancery Court denied plaintiffs’ request to issue an injunction that would block or delay completion of the exchange offer.

“As we’ve talked with Aquila investors around the country, we’ve found the exchange offer has been well received,” said Robert K. Green, UtiliCorp CEO. “Today’s market is very different from early last year, and calls for a different approach. We strongly believe that greater shareholder value can be obtained by recombining the financial strength of UtiliCorp with Aquila’s growth potential.”

Green added that UtiliCorp does not plan to change the terms of its offer, which gives Aquila shareholders 0.6896 shares of UtiliCorp common stock in a tax-free exchange for each outstanding share of Aquila Class A common stock tendered. Following the successful completion of the exchange offer, the company said it plans to complete a “short-form” merger of Aquila with a UtiliCorp subsidiary.

In the merger, each remaining Aquila Class A share will be converted (subject to the exercise of appraisal rights) into the same number of shares of UtiliCorp common stock as are paid in the exchange offer. As soon as practical following the completion of the short-form merger, UtiliCorp will adopt “Aquila” as its corporate name.

Based in Kansas City, UtiliCorp United is an international electric and gas company with energy customers and operations across the U.S. and in Canada, the United Kingdom, New Zealand, and Australia. Aquila sells wholesale electricity and natural gas in North America.

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