B - Mergers
and Acquisitions
WICOR,
Inc.: On June 27, 1999, Wisconsin Energy and
WICOR, Inc., a Wisconsin corporation, entered into an Agreement and
Plan of Merger providing for a strategic business combination of Wisconsin
Energy and WICOR. The merger will be accounted for as a purchase transaction.
WICOR is a diversified holding company with total assets of approximately
$1.1 billion at December 31, 1999 in utility and non-utility energy
subsidiaries as well as in pump manufacturing subsidiaries. Under the
terms of the agreement, Wisconsin Energy will acquire all of the outstanding
shares of WICOR common stock for a fixed price of $31.50 for each WICOR
share representing a total purchase price of approximately $1.2 billion
at December 31, 1999. In addition, WICOR had approximately $300 million
of assumable debt outstanding at December 31, 1999. Following the merger,
WICOR and its subsidiaries will become subsidiaries of Wisconsin Energy.
The merger agreement has been approved by the boards of directors and
the shareholders of Wisconsin Energy and WICOR as well as by the Public
Service Commission of Wisconsin. In early March 2000, the Federal Trade
Commission closed its review of the proposed acquisition. Consummation
of the merger is subject to the satisfaction of certain closing conditions
including approval by the Securities and Exchange Commission. The regulatory
approval process is expected to be completed in time for the transaction
to be consummated on or about April 26, 2000.
United
Illuminating Generating Plants: In April 1999, Wisvest-Connecticut,
LLC, a wholly owned subsidiary of Wisvest Corporation, acquired two
fossil-fueled power plants in the state of Connecticut for $277 million
from The United Illuminating Company, an unaffiliated investor-owned
utility in New Haven, Connecticut. Wisconsin Energy accounted for the
transaction under the purchase method of accounting.
ESELCO,
Inc.: On May 31, 1998, Wisconsin Energy acquired ESELCO,
Inc. in a tax-free reorganization accounted for as a pooling of interests.
ESELCO was the parent company of Edison Sault Electric Company, an electric
utility serving approximately 21,800 residential, commercial and industrial
customers in Michigan's Eastern Upper Peninsula. In connection with
the acquisition, Wisconsin Energy issued 2,407,275 shares of Wisconsin
Energy common stock for the outstanding shares of ESELCO common stock.
Due to the immaterial nature of the transaction, Wisconsin Energy has
not restated any historical financial or statistical information. Instead,
Wisconsin Energy combined ESELCO's May 31, 1998 balance sheet with Wisconsin
Energy's, including a $1.2 million credit to retained earnings of which
$0.9 million represented ESELCO's consolidated net income during the
first five months of 1998. Wisconsin Energy is operating Edison Sault
as a separate utility subsidiary.
Northern
States Power Company: On May 16, 1997, the boards of directors
of Wisconsin Energy and Northern States Power Company, a Minnesota corporation,
agreed to terminate by mutual written consent an Agreement and Plan
of Merger which provided for a business combination of Wisconsin Energy
and Northern States Power Company to form Primergy Corporation. As a
result, Wisconsin Energy recorded a $30.7 million charge in the second
quarter of 1997 ($18.8 million net of tax or approximately 17 cents
per share) to write off deferred transaction costs and costs to achieve
the merger.
