IES Holders Back Merger, Rebuff MidAmerican Bid
May 19, 2011
IES Industries Inc. said stockholders approved a management-backed proposal to merge with two other utilities, in a move that will thwart a rival $1.15 billion buyout bid from MidAmerican Energy Co.. Calling results of the proxy fight ``a victory for IES shareholders,'' the Cedar Rapids, Iowa, company said it expects to complete its planned merger with Interstate Power Co. and WPL Holdings Inc. in the next eight to 10 months. Investors displayed less enthusiasm. In New York Stock Exchange composite trading Thursday, IES shares slipped 87.5 cents to close at $32.25. From a strictly financial standpoint, MidAmerican's nearly $39-a-share bid is significantly superior to the about $33.63 a share in stock that IES holders to receive in the three-way combination. But IES said that more than 75% of the votes cast at the meeting, representing more than 57% of the company's total shares outstanding, backed the friendly merger proposal. Late Thursday afternoon, MidAmerican was unwilling to concede that the balloting had gone against it. A final tally won't be complete for several weeks, the Des Moines, Iowa, company noted, maintaining that it remains ``hopeful'' that its proxy measure will prevail. IES agreed last year to merge with Interstate Power of Dubuque, Iowa, and WPL Holdings of Madison, Wis., to form what the three utilities say will be a more-competitive ``regional powerhouse'' to be known as Interstate Energy Corp.. Last month, however, MidAmerican sought to derail that combination, by proposing to acquire IES through a cash-and-stock bid that would provide IES holders with a richer premium and a bigger dividend. MidAmerican's proposal offers $39 in cash for as much as 40% of IES's shares; the stock portion of the deal would provide 2.346 MidAmerican shares-valued at $38.122 at Thursday's closing price-for the remainder. After IES rebuffed that bid in favor of a sweetened version of the three-way combination, MidAmerican filed the dissident proxy materials, which asked IES holders to vote against the management plan. Last week, the often-influential proxy-advisory firm Institutional Shareholder Services recommended that IES stockholders back MidAmerican's proxy measure. While noting that evaluating the two competing merger plans is complicated by a welter of hard-to-quantify strategic and regulatory issues, the firm said IES should hold talks with MidAmerican because of the larger premium its bid would provide. In separate elections free of proxy challenges, stockholders at Interstate Power and WPL Holdings also approved the three-way combination Thursday. In Big Board trading Thursday, MidAmerican shares rose 37.5 cents to $16.25, WPL Holdings shares fell 25 cents to $29.50, and Interstate Power shares closed unchanged at $30.75.
