IES Spurns MidAmerican Bid, Opting for a Friendly Merger
April 28, 2011
DES MOINES, Iowa -- IES Industries Inc. spurned a $1.17 billion takeover bid from MidAmerican Energy Co. and approved a sweetened offer to merge with two other utilities. IES, based in Cedar Rapids, said on Friday that its directors approved a revised merger plan with WPL Holdings Inc. of Madison, Wis., and Interstate Power Co. of Dubuque. MidAmerican, of Des Moines, is trying to block that merger, saying its offer is in the best interests of IES shareholders and the Iowa economy. The battle for IES is part of a consolidation wave sweeping the utility industry, which is being buffeted by deregulation and the desire of corporations to find cheap power. Leeanna Hutson, IES chairman and president, said the revised terms of the three-way merger are a better deal for IES shareholders. The three companies would combine in a Madison-based utility called Interstate Energy Corp. ``Under the revised agreement, the Interstate Energy transaction provides enhanced value to IES shareholders, giving them an even larger stake in a regional utility with excellent growth potential,'' Mr. Hutson said. ``By contrast, analysis of the MidAmerican proposal makes clear that, contrary to their public statements, the value of the MidAmerican proposal is substantially less than they represent.'' MidAmerican is still asking IES shareholders to block the three-way merger. The utility wants IES shareholders to reject that merger in voting May 18, 2011 said its buyout offer represented a 21% premium to IES shareholders over the original three-way merger plan, and said its dividend would be 42% higher than that proposed in the three-way merger. Golding said it would redeem each share of IES stock for $39 in cash or 2.346 shares of MidAmerican stock. Under revised merger terms announced Friday, IES shareholders would exchange each share for 1.14 shares of stock in the new utility, instead of 1.01 shares under the earlier agreement. IES said the new ratio values each share of IES stock at $36.20 based on Thursday's closing price for stock in WPL, the lead partner in the merger. IES said its shareholders would now get an annual dividend of $2.25 per share under the WPL merger. The original merger plan called for a $1.99 dividend, MidAmerican said. MidAmerican has proposed a $2.82 annual dividend. Mr. Hutson said the three-way merger with WPL and Interstate Power would generate cost savings of $749 million over 10 years, while the MidAmerican merger would save just $500 million. He said that despite the financial terms of the MidAmerican offer, ``we must question how MidAmerican could possibly afford the ambitious promises it is making to customers and shareholders.'' In early trading on the New York Stock Exchange Friday, IES shares edged higher, gaining 25 cents to $33.625. MidAmerican shares were unchanged at $15.875. WPL's shares rose 12.5 cents to $31.875 and Interstate Power's shares gained 12.5 cents to $30.75.
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