EXHIBIT (99)-1 [LETTERHEAD OF NORTHERN STATES POWER]May 1, 1995 NORTHERN STATES POWER, WISCONSIN ENERGY ANNOUNCE STRATEGIC BUSINESS COMBINATION
Minneapolis, Minn., and Milwaukee, Wis. -- Northern
States Power Company (NYSE: NSP) of Minneapolis, and Wisconsin
Energy Corporation (NYSE: WEC) of Milwaukee, two of the na-
tion's leading utility companies, today announced that they
have signed a definitive agreement to engage in a strategic
The merger-of-equals transaction, which was unani-
mously approved by both companies' Boards of Directors, will
join two companies whose current combined market capitalization
is approximately $6.0 billion, and will create the tenth-
largest investor-owned utility company in the United States,
based on market capitalization. For the year ended December31, 1994, the combined revenues of Wisconsin Energy and North-
ern States Power were $4.2 billion, with assets of more than
In view of both companies' management teams, this
transaction creates a combined enterprise well-positioned for
an increasingly competitive energy industry environment. It is
designed to achieve continued competitive energy rates over the
long term for the companies' respective customers and to en-
hance value for the shareholders of both companies. A pre-
liminary estimate indicates that the merger will result in net
savings of approximately $2.0 billion over 10 years.
Upon completion of the merger, the synergies created
will allow the companies to implement a modest retail electric
rate reduction followed by a rate freeze for retail electric
customers through the year 2000.
As a result of the transaction, a registered public
utility holding company, which will be known as Primergy Cor-
poration (Primergy), will be the parent of both NSP and the
current operating subsidiaries of Wisconsin Energy. Primergy
will serve 2.3 million electric customers and 750,000 natural
gas customers, and its service territory will include portions
of Minnesota, Wisconsin, North Dakota, South Dakota and the
Upper Peninsula of Michigan. The business of Primergy will
consist of utility operations and various non-utility enter-
prises, including independent power projects.
After giving effect to the transaction, holders of
Northern States Power (NSP) common stock will own 1.626 shares
of stock of Primergy for each share of NSP stock they own, and
Wisconsin Energy (WEC) shareholders will own one share of
Primergy common stock for each share of Wisconsin Energy common
stock they own. As of April 20, 1995, Wisconsin Energy had
109.4 million shares outstanding, and Northern States Power had
67.3 million shares outstanding. Accordingly, based on the
number of outstanding common shares, 50% of the common equity
of Primergy would be held by existing Northern States Power
Company shareholders and 50% by existing Wisconsin Energy com-
mon shareholders. The holders of preferred stock of Northern
States Power will receive preferred stock in a successor cor-
poration with identical terms. The preferred stock of Wiscon-
sin Electric Power Company will remain outstanding after the
transaction. It is a condition of closing that the parties
receive an Internal Revenue Service ruling that the exchange of
stock qualifies as a tax-free transaction, and obtain appro-
priate accounting assurances that the transaction will be
accounted for as a pooling of interests.
It is anticipated that Primergy will adopt NSP's
dividend payment level adjusted for the exchange ratio. NSP
currently pays $2.64 per share annually, and WEC's annual div-
idend rate is currently $1.47 per share. Based on the exchange
ratio and NSP's current dividend rate, the pro forma dividend
rate for Primergy would be $1.62 per share. Both companies
have historically increased their dividends consistently, and
anticipate that such policies will continue, both before and
after the merger, subject to earnings performance and regula-
James J. Howard, chairman, president and chief exec-
utive officer of NSP, said: "This transaction is the best and
most financially conservative way to ensure continued competi-
tive rates over the long term for the customers of both compa-
nies. By doing that, we will help our communities attract new
business, add jobs and strengthen the economy in our combined
service territory. That, in turn, will position the combined
company to build long-term value for all its shareholders --
many of whom are also customers."
Richard A. Abdoo, chairman, president and chief ex-
ecutive officer of Wisconsin Energy Corporation, said: "This
merger gets us in front of the changing energy marketplace. We
are initiating a thoughtful combining of resources and talents
to manage successfully in the much more demanding times ahead.
Our common goal is to be a premier investor-owned energy com-
pany -- in meeting customer needs, having competitive rates and
creating shareholder value."
Following completion of the merger, Howard, 59, will
serve as chairman and chief executive officer of Primergy.
Abdoo, 51, will become vice chairman, president and chief op-
erating officer of Primergy. Abdoo will become chief executive
officer of Primergy in May 1998. Howard will continue as
chairman of the new company until his expected normal retire-
ment date in July 2000, at which time Abdoo will become chair-
After the merger, Northern States Power Company and
Wisconsin Energy Company (a consolidation of Wisconsin Energy's
existing utility subsidiaries Wisconsin Electric Power Company
and Wisconsin Natural Gas Company) will continue to operate
under those names as the principal subsidiaries of Primergy.
It is anticipated that, following the merger, NSP-Wisconsin
will merge into Wisconsin Energy. The headquarters of the two
utilities will remain in their current locations, NSP's in
Minneapolis and Wisconsin Energy's in Milwaukee. The head-
quarters of Primergy, a Wisconsin corporation, will be in Min-
neapolis. The Board of Directors of Primergy will be composed
of six current directors of NSP and six current directors of
WEC. "The benefits of this strategic combination for
shareholders are expected to be substantial," Howard said.
"Value will be obtained from the strengthening and improved
cost-efficiency of our combined product lines. The profes-
sional, productive attitudes of both employee groups will com-
bine to enhance solid traditions of quality customer service.""We intend to be a winner in the new market ahead,"
Abdoo stated, "and that means first and foremost a clear focus
on customers. Knowing what our customers want, and meeting
those needs quickly, efficiently and with quality is what this
merger of two great companies is all about."
According to Howard and Abdoo, an additional benefit
of the merger is that it will leverage the complementary envi-
ronmental expertise and leadership of both companies. The
combined entity will utilize the most efficient, least-pol-
luting generation sources available to provide customers with
reliable electricity systemwide.
Both NSP and WEC recognize that the divestiture of
their existing gas operations and certain non-utility opera-
tions is a possibility under the new registered holding company
structure, but will seek approval from the Securities and Ex-
change Commission to maintain such businesses. If divestiture
is ultimately required, the SEC has historically allowed com-
panies sufficient time to accomplish divestitures in a manner
that protects shareholder values.
The merger is subject to approval by the shareholders
of both companies and various regulatory agencies including the
Securities and Exchange Commission; the Federal Energy Regula-
tory Commission; state regulators in Minnesota, Wisconsin and
certain other states where the companies conduct business; and
the Nuclear Regulatory Commission. The merger is also subject
to the termination or expiration of the applicable waiting pe-
riod under the Hart-Scott-Rodino Antitrust Improvements Act.
It is expected that preliminary proxy materials will be filed
with the Securities and Exchange Commission in the near future.
While the timing of the regulatory process cannot be predicted
with certainty, the parties currently expect completion of the
transaction in the fourth quarter of 1996.
# # #
Wisconsin Energy Corporation
Wisconsin Energy (WEC), headquartered in Milwaukee,
is a holding company with seven wholly owned subsidiaries and
approximately 5,000 employees. The utility subsidiaries are
Wisconsin Electric Power Company (WEPCO) and Wisconsin Natural
Gas Company (WNG).
WEPCO serves about 945,000 electric customers in
three non-contiguous areas which include southeastern Wisconsin
(including the Milwaukee area), eastern Wisconsin (including
Appleton), and northeastern Wisconsin and the Upper Peninsula
of Michigan. WEPCO also sells steam utility service in down-
town Milwaukee to both space heating and manufacturing cus-
WEC's electric energy mix is 64% coal, 27% nuclear,
7% purchased power and 2% other. The Point Beach nuclear units
1 and 2 provide 19% of company-owned generating capability.
WNG services about 350,000 gas customers in south-
eastern Wisconsin, the Fox Valley, and in the Prairie du Chien
area. In 1994, WNG acquired Wisconsin Southern Gas Company,
Inc. If regulatory approvals are obtained, WNG will merge with
WEPCO December 31, 1995.
Wisconsin Energy's non-utility subsidiaries --
WisPark Corp., Witech Corp., Wisvest Corp., Badger Service Co.,
and Wisconsin Michigan Investment Corp. -- are devoted prima-
rily to stimulating economic growth in the utilities' service
territories and to capitalizing on diversified investment op-
portunities for shareholders.
Northern States Power Company
Northern States Power Company (NSP), with headquar-
ters in Minneapolis, serves customers in Minnesota, Wisconsin,
North Dakota, South Dakota and Michigan. NSP generates,
transmits and distributes electricity to about 1.4 million
customers and distributes natural gas to approximately 400,000
customers. The company employs approximately 7,000 people.
NSP-Minnesota operates in Minnesota, North Dakota and
South Dakota. NSP-Wisconsin is a wholly owned subsidiary op-
erating in Wisconsin and the Upper Peninsula of Michigan.
NSP's electric energy mix is 48% coal, 28% nuclear,
20% purchased power and 4% hydro and renewables. NSP's Prairie
Island and Monticello nuclear plants provide 22% of company-
owned generating capability.
NRG Energy, Inc., with headquarters in Minneapolis,
is a wholly owned subsidiary operating non-regulated energy
Cenergy, Inc., a wholly owned subsidiary of NSP,
markets natural gas and energy-related services throughout the
United States. In December 1994, the Federal Energy Regulatory
Commission granted the company a license to also market elec-
Viking Gas Transmission Company, also a wholly owned
subsidiary, owns and operates a 500-mile natural gas pipeline
serving the Upper Midwest. The pipeline provides transporta-
tion services and has direct access to four major interstate
and international pipelines linked to the majority of natural
gas supplies in North America.
For Northern States Power Company For Wisconsin Energy Corporation
Investor inquiries: Investor inquiries:
Dick Kolkmann Cal Baker
Jackie Currier Jeff West
Media inquiries: Media inquiries:
Margaret Papin Rick James
612/337-2167 414/221-4444 (Monday, 5/1)
414/221-3818 (Tuesday, 5/2 and
Dates Referenced Herein and Documents Incorporated By Reference