Wisconsin Energy Corp. buying Integrys Energy
We Energies parent company to become 14th largest utility

By Arthur Thomas - Freeman Staff

June 24, 2014

The combined service territory of Wisconsin Energy Corporation and Integrys.  
Illustration from Wisconsin Energy Corp. investor relations

WAUKESHA - With its acquisition of Integrys Energy Group, Wisconsin Energy Corp. will create a company serving 4.3 million gas and electric customers in Wisconsin, Illinois, Michigan and Minnesota.

Wisconsin Energy, the parent company of We Energies, will purchase Integrys for $71.47 per share.

Integrys shareholders will receive 1.128 Wisconsin Energy shares and $18.58 in cash for each share they own.

The total represents a 17.3 percent premium on Integrys’ closing price on Friday. The total deal is worth $9.1 billion, including $5.8 billion for Integrys shares and $3.3 billion of assumed Integrys debt.

The combined company - WEC Energy Group - will be the eighth largest natural gas company in the country and will be headquartered in metropolitan Milwaukee with operating headquarters in Chicago, Green Bay and Milwaukee.

Individually, Wisconsin Energy Corp. is the 20th largest publicly trade electric and gas utility. Integrys is the 34th largest. Combined, the new company will be the 14th largest with a market value of $15 billion.

Wisconsin Energy CEO Gale Klappa said the deal provided a unique opportunity for the new combined company.

“The operational and financial benefits to all of our stakeholders - from the customers and communities we serve, to the people we employ, to the shareholders who count on us to create value - are clear, achievable and compelling,” Klappa said.

The board of each company has signed off on the deal, but it is still subject to shareholder approval, along with federal regulators and those in each of the four states. The companies anticipate closing next summer.

The combined company would operate nearly 71,000 miles of electric distribution lines and more than 44,000 miles of gas transmission and distribution lines.

WEC Energy Group would also have more than a 60 percent stake in Pewaukee-based American Transmission Company.

Anne Spaltholz, a spokeswoman for ATC, said the company is proud of its relationship with both companies and doesn’t expect the acquisition will lead to any significant changes for ATC.

Klappa added the deal would not hurt Wisconsin Energy’s growth rate, would be largely credit neutral and would be accretive to earnings per share in the first calendar year after closing.

Integrys Chairman and CEO Charlie Schrock said during a conference call with analysts that the company considered other logical possibilities for a merger, but did not actively seek bids from any other companies.

In a statement, Schrock credited compatible operational philosophies - among other reasons - for the combination making sense.

“Our shareholders will receive an attractive premium for their investment and will also benefit from the opportunity to participate in the upside of the combination, including future value creation and a growing dividend program,” he said.

Klappa will be CEO of the new company. The board of Wisconsin Energy will add three members of the Integrys board. Schrock will stay on as CEO of Integrys until the deal is approved.

www.wisconsinenergy.com

www.integrysgroup.com

Email: athomas@conleynet.com