Tags: Northeast-Utilities | Buy | NSTAR

Northeast Utilities to Buy Nstar for $4.17 Billion

Monday, 18 Oct 2010 07:31 AM

Northeast Utilities will buy Nstar for $4.17 billion, forming one of the nation's biggest utility companies with 3.5 million electric and gas customers in three New England states.

The acquisition should help Northeast pay for large transmission projects designed to bring low-carbon power from Northern New England and Canada to higher population areas in southern New Hampshire, Massachusetts and Connecticut. The combined company plans to spend $9 billion on these projects from 2011 through 2015.

Together, the companies will own six regulated gas and electric utilities. Northeast Utilities and Nstar said that customers in Connecticut, Massachusetts and New Hampshire will not see any rate change related to the transaction.

The transaction is worth $40.28 per share, a 2 percent premium to Nstar's closing price Friday. Each Nstar stockholder will receive 1.312 Northeast shares for each share they own.

The companies called the deal a merger of equals. However, after the deal closes Northeast Utilities stockholders will likely own about 56 percent of the combined business. Nstar shareholders will own about 44 percent. The combined company will be called Northeast Utilities.

The companies plan to increase Northeast Utilities' dividend to a level equal to Nstar's dividend once the transaction is complete. Nstar pays a quarterly dividend of 40 cents per share, while Northeast pays 25.625 cents.

Northeast Utilities Chairman, CEO and President Charles W. Shivery will become the non-executive chairman of the combined company for a period of 18 months. Nstar Chairman, President and CEO Thomas J. May will serve as president and CEO of Northeast Utilities and assume the additional role of chairman after the 18-month period.

The combined company will have headquarters in Boston, where Nstar is based, and Hartford, Conn., the home of Northeast Utilities. Each company will nominate seven trustees to the board. The lead trustee will be nominated by Northeast Utilities' board.

The transaction must receive approval from two-thirds of the outstanding shares of both companies. It must also be reviewed by a number of federal and state energy authorities. The regulatory approvals are anticipated to be received within nine months to a year.

The deal is expected to add to Northeast Utilities earnings in the first year after its closing. Shareholder approval for the transaction will be sought in early 2011, the companies said Monday.

© 2017 Thomson/Reuters. All rights reserved.

 
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Northeast Utilities will buy Nstar for $4.17 billion, forming one of the nation's biggest utility companies with 3.5 million electric and gas customers in three New England states. The acquisition should help Northeast pay for large transmission projects designed to bring...
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2010-31-18
Monday, 18 Oct 2010 07:31 AM
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