IES Rejects MidAmerican Merger Bid
DES MOINES, Iowa (AP) _ IES Industries Inc. directors approved a sweetened offer to merge with two other utilities, rejecting a $1.17 billion buyout bid from MidAmerican Energy Co.
IES, based in Cedar Rapids, said Friday that its directors approved a revised merger plan with WPL Holdings Inc. of Madison, Wis. and Interstate Power Co. of Dubuque that values IES at $1.07 billion.
IES said the MidAmerican offer was really worth less to IES shareholders because of tax consequences to those who sell for cash. Stock swaps, like the proposed three-way deal, are typically tax free.
Des Moines-based MidAmerican said it will continue its proxy effort to block the Wisconsin merger, which is to be voted on by IES shareholders Sept. 5. MidAmerican is the largest utility in Iowa and IES is No. 2.
``With the three-way merger we’re going to have a diversified customer base in four states,″ said Lee Liu, IES chairman and president. He added that the MidAmerican deal would make too much of its business dependent on the Iowa economy.
``We’re extremely disappointed that IES has chosen to pursue an inferior transaction,″ MidAmerican spokesman Keith Hartje said Friday. ``The fact is that MidAmerican has the better offer on the table.″
MidAmerican said it would redeem each share of IES stock for $39 in cash or 2.346 shares of MidAmerican stock. IES said the offer was really worth about $33 per share because of the tax implications of the cash portion of the deal.
Under revised terms of the three-way merger 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.
A MidAmerican-IES combination would have 965,000 electric and 774,000 natural gas customers in Iowa, Illinois, South Dakota and Nebraska.
The Wisconsin merger would create a Madison-based utility called Interstate Energy Corp. It would have 870,000 electric and 360,000 natural gas customers in Wisconsin, Iowa, Minnesota and Illinois.
IES said its shareholders would get an annual dividend of $2.25 per share under the revised Wisconsin merger. The original merger plan, announced last November, called for a $1.99 dividend. MidAmerican has proposed a $2.82 annual dividend.
IES stock rose 50 cents per share to $33.87 1/2 on the New York Stock Exchange.