An investor in Central Vermont Public Service Corp (NYSE:CV) has filed a lawsuit against the board of directors of Central Vermont Public Service over alleged breaches of fiduciary duties in connection with the proposed takeover of Central Vermont Public Service Corporation with Gaz Métro Limited Partnership.
According to the complaint the plaintiff alleges that the defendants failed to negotiate the best price for NYSE CV shares and directors of Central Vermont Public Service and the company seeking to buy Central Vermont Public Service are working to enrich themselves without sharing those benefits with individual shareholders.

On Monday, May 30, 2011, Central Vermont Public Service (NYSE - CV) and Fortis Inc. (TSX - FTS) had announced that they have entered into an agreement for the acquisition by Fortis Inc. of all of the outstanding common shares (CV) of Central Vermont Public Service for an aggregate purchase price of approximately $700 million (U.S.), including the assumption of approximately $230 million (U.S.) of debt. Under the terms of the proposed transaction between Central Vermont Public Service (NYSE - CV) and Fortis Inc. shareholders of Central Vermont Public Service were supposed to receive $35.10 per share in cash.

However, on July 12, 2011 the leaders of Central Vermont Public Service Corporation (NYSE-CV) and Gaz Métro Limited Partnership, which owns Green Mountain Power Corp., announced that an agreement for the sale of Central Vermont Public Service Corporation has been signed. Under the terms of the proposed transaction between Central Vermont Public Service Corporation (NYSE-CV) and Gaz Métro Limited Partnership shareholders of Central Vermont Public Service Corporation (NYSE-CV) will receive US$35.25 per common share.

On the same day Fortis Inc. announced that it was informed that the Board of Directors of Central Vermont Public Service Corporation (NYSE:CV) has determined that the unsolicited acquisition proposal from Gaz Métro Limited Partnership is a Superior Proposal , as that term is defined in the Merger Agreement between Fortis and Central Vermont Public Service Corp. announced on May 30, 2011 and that Central Vermont Public Service has elected to terminate the Merger Agreement in accordance with its terms. Fortis said it expects to receive US$17.5 million termination fee plus US$2.0 million in expenses as set forth in the Merger Agreement

Central Vermont Public Service Corp said the offer by Gaz Métro Limited Partnership represents a 45 percent premium over the closing price of US$24.32 immediately prior to the announcement of the previous agreement Central Vermont Public Service Corp had reached with Fortis Inc.

However the plaintiff alleges that the offers are inadequate. In fact, following the announcement on May 30 NYSE CV shares increased from $24.30 on Friday to $34.50 on the next trading day on Tuesday, May 31, 2011, but rose on June 23, 2011 NYSE CV stock to $35.65 and to as high as $36.16 on June 29, 2011, thus above both offers.

Additionally, the plaintiff claims that the defendants also agreed to a too low price despite Central Vermont Public Service's strong performance and improved earnings in the previous year. In fact, Central Vermont Public Service Corp has performed well for its investors in the past. Even though its past four annual 12months Total Revenue have been relatively consistent within a range between $329.11million and $342.16million, Central Vermont Public Service’s annual Revenue rose from $329.11million in 07 to $341.93million in 2010. Further, its Net Income surged within the same time frame from $15.44million in 2007 to $20.59million in 2010. For the first quarter in 2011 Central Vermont Public Service Corp reported a quartly Total Revenue of $97.08million for the first quarter in 2011 compared to $91.01million for the first quarter in 2010. Its Net Income for the frist quarter 2011 more than doubled from the first quarter in 2010. Central Vermont Public Service Corp reported $8.43million for the first quarter in 2011 compared to $4.20million for the first quarter in 2010.

Additionally the plaintiff alleges that directors of Central Vermont Public Service and others hurt the shareholders by having to pay $19.5 million to cancel a deal with Fortis Inc and that the Gaz Metro proposal includes the same preclusive devices that resulted in the $19.5 million termination fee to Fortis Inc. which will either discourage additional bids for Central Vermont Public Service or require another substantial cash payment if Central Vermont Public Service backs out of the agreement with Gaz Metro Limited Partnership.