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SIOUX FALLS, S.D. — NorthWestern Corp. announced Monday that it has reached a preliminary settlement agreement in a shareholders lawsuit against its board of directors.

The Employees' Retirement System of Livonia, Mich., contended in the federal suit that NorthWestern's board failed to respond in good faith to outside offers to purchase the Sioux Falls-based company.

The energy company has since announced that it has agreed to be acquired by Babcock & Brown Infrastructure of Sydney, Australia, in a cash deal worth $2.2 billion.

NorthWestern said in a release that it continues to deny the allegations in the lawsuit. The parties will present a settlement agreement to the federal court for preliminary approval, and if it is approved the lawsuit would be dismissed, according to the release.

The NorthWestern board had implemented a stockholder rights plan — a so-called "poison pill" — that was meant to discourage takeover attempts.

NorthWestern, doing business as NorthWestern Energy, provides electricity and natural gas to about 600,000 customers in South Dakota, Montana and Nebraska.

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