1. AGA 2017 Legal Forum Mergers and Acquisitions from the
General Counsel’s Perspective
Jane Lewis-Raymond

2. Roadmap Overview of Board responsibilities Recent transactions
Analysis of deal terms

3. Overview of Board Responsibilities
Generally, Board decisions are protected by the business judgment rule
Directors owe two core fiduciary duties to Corporation
1. Duty of care- directors must inform themselves “prior to making a business decision, of all material information reasonably available to them.” Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984).

4. Overview of Board Responsibilities
2. Duty of loyalty- interests of corporation & stockholders above director’s personal interests
Managers participating in post-merger entity should:
be excluded from decision-making meetings
not negotiate or discuss employment until agreement is finalized
Independent and disinterested directors should be consulted
Duty of Good Faith
Duty of confidentiality – applies to all corporate information

5. Board Responsibilities in M&A Context
Response to unsolicited acquisition proposal
Directors should inform themselves prior to deciding how to respond
No duty to negotiate – Revlon duties not triggered until some action taken
At least one Delaware court has recognized a possible duty to defend against unsolicited acquisition proposal if it appears prudent to do so

6. Board Responsibilities in M&A Context (cont.)
Company “up for sale” triggers changed duty – Revlon duties
When do Revlon duties apply?
Cash-out transaction
Stock-for-stock transaction
Yes, when target’s stockholders become minority stake-holders
Mixed deals? Maybe, but it depends on the split % of cash and stock
Likely, + 50% cash triggers Revlon

7. Revlon Duties Implications
Shift from long-term-value to best short-term price for stockholders
highest bid “reasonably available”
duty to be informed – fully consider alternative transactions offered by any responsible buyer
Directors must obtain “all material information necessary to compare the two offers to determine which of [the] transactions, or an alternative course of action, would provide the best value reasonably available to the stockholders...” Paramount Communications, Inc. v. QVC Network Inc., 637 A.2d 34 (Del. 1994)
Enhanced judicial scrutiny demands: Did the directors make a reasonable decision, not a perfect decision?
“Reasonableness, not perfection, measured in business terms relevant to value creation, rather than by what creates the most sterile smell, is the metric.” In re Lear Corp. Shareholders Litigation, 926 A.2d 94 (Del. Ch. 2007)
Complying with Revlon Duties – “reasonableness”
“No court can tell directors exactly how to satisfy that goal, because they will be facing a unique combination of circumstances, many of which will be outside of their control.” Lyondell Chem. Co. v. Ryan, 970 A.2d 235 (Del. 2009)
Could involve soliciting bids from potential buyers before signing merger agreement
Not always necessary
“Go-shop” provisions – Can be reasonable
Board can rely on other factors like certainty of completion and required government consents

8. Other Considerations Announcement of transaction Shareholder approval
Form 8-K
Shareholder approval
Duty of disclosure – full disclosure to stockholders of all facts and circumstances relevant to board decision
Proxy solicitation process
Pre-closing considerations
State regulatory approvals
HSR process
CFIUS
“Gun jumping”
Post-closing integration
Disclosure Controls and Procedures
NYSE/Nasdaq considerations

9. Regulatory Hart Scott Rodino process State Regulatory Approval process
start thinking of this while considering potential offers to weigh HSR confidence for your board
State Regulatory Approval process
No harm to consumers
Positive benefit to consumers
More than one state considerations

10. Overview of Recent Transactions
Laclede & Missouri Gas Energy
Laclede & Alagasco
Iberdrola & UIL
Southern Company & AGL Resources
Emera & TECO
Duke Energy & Piedmont Natural Gas
Dominion Resources & Questar Corporation
Enbridge & Spectra Energy
AltaGas & Washington Gas
*Great Plains & Westar

11. Transaction Timeline Laclede / Missouri Gas Energy September 2013
Iberdrola
/ UIL
December
2015
Emera
/ TECO
July
2016
Duke Energy /
PNG
October
2016
Great Plains
/ Westar
*expected
Fall
2017
Laclede
/ Alagasco
August
2014
Southern
Company
/ AGL
Resources
July
2016
Dominion
Resources
/ Questar
September
2016
Enbridge/
Spectra
February
2017
Alta Gas /
Washington
Gas
*expected
2018

12. Laclede & Missouri Gas Energy
$ Sale
Proportions cash / stock
Signing / Closing
Rationale for Deal
$975 M
All-cash transaction
December 2012 -
September 2013
(9 mos.)
Leverage Laclede's core gas utility expertise and further expand its footprint
Ability to support growth initiatives in new markets with new customers
Strong geographic and regulatory fit
Earnings and cash flow accretive
Significant stakeholder benefits

13. Laclede & Alagasco $ 1.6 B All-cash transaction April 2014 –
$ Sale
Proportions cash / stock
Signing / Closing
Rationale for Deal
$ 1.6 B
All-cash transaction
April 2014 –
September 2014
(5 mos.)
Paired with acquisition of MS gas, Laclede became largest gas provider in both states
Expanded footprint of its regulated gas utility business
Geographic and regulatory diversity

14. Iberdrola & UIL $ Sale Proportions cash / stock Signing / Closing
Rationale for Deal
$3 billion
20% Cash / 80% Stock
February 2015 -
December 2015
One of the largest utilities in the US and 2nd largest wind operator company
Expands presence in the US
Creates a combination of geographically complementary businesses and opportunities to jointly develop new projects and operations
Allows an implicit value creation of Iberdrola USA via separate public listing without assets divestment
Leverages both management teams, with a successful regulatory track record in the US, led by the current UIL CEO

15. Southern Company & AGL Resources
$ Sale
Proportions cash / stock
Signing / Closing
Rationale for Deal
$ 12 B
All-cash transaction
August 2015 -
July 2016
(11 mos.)
Created 2nd largest utility company by customer-base in US
Combined company provides wholesale electricity generation and natural gas services, retail energy services and natural gas storage operations
Advance customer-focused business model
Combined company serves utility customers in nine states — Alabama, Florida, Georgia, Illinois, Maryland, Mississippi, New Jersey, Tennessee and Virginia

16. Emera & TECO $ Sale Proportions cash / stock Signing / Closing
Rationale for Deal
$10.4 billion
All-cash transaction
September 2015 -
July 2016
(10 mos.)
Strategic fit for Emera due to its business and generation mix and expanded U.S. presence in constructive regulatory jurisdictions
New platform in growth markets, and further opportunities to supply customers with cleaner generation

17. Duke Energy & Piedmont Natural Gas
$ Sale
Proportions cash / stock
Signing / Closing
Rationale for Deal
$ 4.9 B
All-cash transaction
October 2015 –
October 2016
(12 mos.)
Compelling value to shareholders
Greatly expanded platform for future growth
Enhanced customer service
Customer base expansion

18. Dominion Resources & Questar Corporation
$ Sale
Proportions cash/stock
Signing / Closing
Rationale for Deal
$ 4.4 B
All-cash transaction
January 2016 -
September 2016
(9 mos.)
Enhanced geographic diversity to Dominion's natural gas operations
Improved Dominion's balance between electric and gas operations
Enhanced scale and diversification into Questar's regulatory jurisdictions

19. Enbridge & Spectra Energy
$ Sale
Proportions cash / stock
Signing / Closing
Rationale for Deal
$28 billion
All Stock
September 2016 -
February 2017
(5 mos.)
Created largest energy infrastructure company in North America with C$165 billion (US$127 billion) enterprise value
Complementary and diversified asset base to increase customer service offerings and optionality
Enhanced ability to pursue projects that will improve customer access and service

20. AltaGas & Washington Gas Energy
$ Sale
Proportions cash / stock
Signing / Closing
Rationale for Deal
$ 6.4 B
All-cash transaction
January 2017 -
Expected close (Q2, 2018)
Targeted more high-growth markets
Expanded energy infrastructure portfolio in North America

21. Great Plains & Westar
Signing Date = May 2016 (Closing date expected in the fall of 2017)
Purchase price = $12.2 B
85% cash and 15% stock
Kansas Corporation Commission Rejected = April 2017
Reasons for rejection
Not a “merger of equals” – Great Plains overpaid by + $100M, burdening Westar with significant debt and unconvinced estimates for potential savings for customers would materialize
No significant safeguards that would protect consumers, such as maintaining a separate, independent Westar Board of Directors
Westar and Great Plains filed Petition for Reconsideration on May 4, 2017

22. Summary of Key Terms Transaction Post-Transaction Commitment
Survival Period For General Reps / Warranties
Basket/Cap
Sandbagging
Break-up Fees
Laclede / Southern Union
Purchased Seller’s MA natural gas distribution business simultaneously
24 months
$10 million (1.03%) true deductible; $100 million (10.26%) cap
Silent
Reverse break-up fee: $73.13 million
Laclede / Alabama Gas
Transition Services to Seller
12 months
$15 million (0.94%) true deductible ($100,000 mini basket);
$25 million (1.56%) cap
Anti-Sandbagging
None

23. Summary of Key Terms Transaction Notable Post-Transaction Commitments
Fiduciary Out; Matching Rights
Break-up Fee
Reverse Break-up Fee
Iberdrola / UIL
-Iberdrola to increase its Board up to 12 directors; 3 directors designated by
UIL, including Target's CEO, and the remainder selected by Iberdrola
-Iberdrola to be listed on NYSE
-UIL and Iberdrola to negotiate a SH Agreement with Iberdrola’s Spanish parent company
-Iberdrola to maintain
UIL’s charitable giving and corporate philanthropy programs
Yes
2.50% ($75 million)
None
Southern / AGL Resources
2.51% ($201 million)

24. Summary of Key Terms Transaction Notable Post-Transaction Commitments
Fiduciary Out; Matching Rights
Break-up Fee
Reverse Break-up Fee
Emera / TECO
-Emera to continue TECO’s divestiture of coal subsidiary
-Emera to maintain TECO’s headquarters in Tampa, Florida, each of TECO’s utility and New Mexico subsidiaries' current headquarters
-Emera to maintain TECO’s historic levels of community involvement
and charitable contributions and support in TECO’s existing service territories
-Emera to appoint 2 TECO directors as members of the Boards of Tampa Electric Company and New Mexico Gas Company, Inc.
Yes
2.04% ($212.5 million)
3.14% ($326.9 million)

25. Summary of Key Terms Transaction Post-Transaction Commitments
Fiduciary Out; Matching Rights
Break-up Fee
Reverse Break-up Fee
Duke / Piedmont
-Duke to appoint one Piedmont director to its Board
-Duke to retain Piedmont name, operate as a business unit of Duke, retain Piedmont’s current headquarters and maintain Piedmont’s current level of community involvement and charitable giving
Yes
1.87% ($125 million)
3.73% ($250 million)
Dominion / Questar
Dominion to appoint one Questar director to its Board
2.25% ($99 million)
3.5% ($154 million)

26. Summary of Key Terms Transaction Notable Post-Transaction Commitments
Fiduciary Out; Matching Rights
Break-up Fee
Reverse Break-up Fee
Enbridge / Spectra
-Enbridge to increase board to 13 directors; 8 directors designated by Enbridge and 5 directors designated by Spectra
-Enbridge to maintain a substantial presence in Houston, which will be the headquarters for
Enbridge’s natural gas business, and maintain, for five years after the closing, comparable levels
of charitable giving
Yes
3.57% ($1 billion)
4.73% CAD ($1.75 billion)
AltaGas / WGL Holdings
None
2.13% ($136 million)
1.06%‒3.20% ($68 million‒$205 million)

27. Summary of Key Terms Transaction Post-Transaction Commitments
Fiduciary Out; Matching Rights
Break-up Fee
Reverse Break-up Fee
Great Plains / Westar Energy
-Great Plains to appoint one Westar Energy director to its Board
-Great Plains to maintain Westar’s headquarters in Topeka, Kansas, and maintain historic levels of community involvement and charitable contributions in Westar’s existing
service territories
Yes
2.3% ($280 million)
0.66%‒3.11% ($80 million‒$380 million)

28. Relevant Cases & Other Sources
Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984)
In re Dollar Thrifty Shareholder Litigation, 14 A.3d 573 (Del. Ch. 2010)
In re Lear Corp. Shareholders Litigation, 926 A.2d 94 (Del. Ch. 2007)
Lyondell Chem. Co. v. Ryan, 970 A.2d 235 (Del. 2009)
Malpiede v. Townson, 780 A.2d 1075 (Del. 2001)
Mills Acquisitions Co. v. Macmillan, Inc., 559 A.2d 1261 (Del. 1989)
Paramount Communications, Inc. v. QVC Network Inc., 637 A.2d 34 (Del. 1994)
Revlon, Inc. v. MacAndrews & Forbes Hldgs, Inc., 506 A.2d 173 (Del. 1986)
Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985)
Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985)
Dominion Resources, Inc., Dominion Resources, Questar Corporation to Combine, New York Times, (Feb. 1, 2016).
Emera to Acquire TECO Energy in US$10.4 Billion Transaction, (Sept. 4, 2015)
Enbridge and Spectra Energy to Combine to Create North America’s Premier Energy Infrastructure Company with C$165 Billion Enterprise Value, (Sept. 6, 2016)
Gavid Bade, Kansas regulators reject $12.2B Westar-Great Plains merger, UtilityDIVE, (Apr. 21, 2017).
Iberdrola USA and UIL Holdings Agree to Merge Operations to Create a Leading Utility in the US, (Feb. 26, 2015)
Laclede Gas, Laclede Completes Purchase of Missouri Gas Energy Assets, Laclede Gas, (Sep. 3, 2013).
Laclede (LG) to Acquire Alabama Gas from Energen (EGN), Streetinsider.com, (Apr. 7, 2014).
Leslie Picker, Duke Energy to Acquire Piedmont for $4.9 Billion, (Oct. 26, 2015).
Southern Company, Southern Company and AGL Resources complete merger, create a leading U.S. energy company, PRNewswire, (Jul. 1, 2016).
WGL Holdings, Inc. Receives Shareholder Approval to Merge Operations with AltaGas Ltd., BusinessWire, (May 10, 2017).