11 July 2006 — Less than a week after WPS Resources Corp. confirmed that it had been in talks with Peoples Energy Corp. about a proposed business combination, the companies announced they have signed a definitive merger agreement that will create an energy company with regulated utilities serving four Midwest states and non-regulated businesses serving customers in the Northeast United States and Canada.
Under the definitive merger agreement, which was unanimously approved by both companies’ boards of directors, each common share of Peoples Energy outstanding immediately prior to the merger will be converted into 0.825 shares of WPS Resources’ common stock. As of Wednesday, July 5, 2006, closing prices, this would result in an approximate value of $41.39 per share for Peoples Energy stock. This represents a premium to Peoples Energy’s shareholders of approximately 14.2 percent, based on the 20 trading day average closing prices for Peoples Energy ending July 5, 2006, and approximately 15.0 percent, based on the closing price for Peoples Energy on July 5, 2006.
Upon consummation of the merger, WPS Resources’ shareholders will own approximately 57.6 percent of the combined company, and Peoples Energy shareholders will own approximately 42.4 percent. After closing, it is intended that the dividend of the combined company will be $0.66 per quarter.
WPS announced that the combined company will be led by Larry L. Weyers, chairman, president, and CEO of WPS Resources, who will serve as its president and CEO. James R. Boris, the current lead director for Peoples Energy, will serve as non-executive chairman of the board. Thomas M. Patrick, chairman, president and CEO of Peoples Energy, announced his intention to retire earlier this year. The combined company’s board will have 16 members, nine selected by WPS Resources and seven by Peoples Energy.
The combined holding company headquarters will be located in Chicago, and a new name for the combined company will be jointly selected by management from both companies. Each of the regulated utility businesses of the combined company will maintain its current name and headquarters. The non-regulated energy marketing businesses of the combined company will be headquartered in Green Bay, Wis.