NGI The Weekly Gas Market Report / NGI All News Access

KeySpan Locks Up Two Northeast Distributors

KeySpan Locks Up Two Northeast Distributors

KeySpan expanded its presence in the Northeast last week with a $2.5 billion acquisition of Weston, MA's Eastern Enterprises and Manchester, NH's EnergyNorth. Joined with KeySpan's Brooklyn Union LDC, the deal creates the largest natural gas distribution company in the Northeast and fifth largest in the United States, with 2.4 million natural gas customers.

The acquisition, financed with $1.96 billion in equity and the assumption of $550 million in debt, was called a "milestone" by KeySpan CEO Robert B. Catell. The purchase gives the New York-based company assets of more than $10 billion, and projected annual revenues of $5 billion, primarily from the consolidation of six utilities in New York and New England.

The acquisition complements KeySpan's position in the New York power market, which it consolidated with the $5.4 billion acquisition of the Long Island Lighting Company (LILCO) in 1998 (see NGI, Feb. 9, 1998).

Catell said the acquisition was a "major step in implementing our strategy of growth and our vision of becoming the premier energy and services company in the Northeast." Going further, Catell said KeySpan expects to see "tremendous growth for regulated and unregulated sales of natural gas and energy-related products and services throughout the region."

Eastern shareholders will receive an acquisition price of $64.558 per share, paid in cash. Eastern shareholders also will receive a portion of the fourth quarter dividend equal to $0.1692 per share paid on Nov. 22. EnergyNorth shareholders will receive an acquisition price of $61.4587 per share, paid in cash and a prorated dividend of $0.2683 per share paid on Nov. 22.

KeySpan expects the acquisition to yield pre-tax annual savings of approximately $40 million, mostly from eliminating duplicate corporate and administrative programs, more efficiencies in operations and business processes, increased purchasing efficiencies and a consolidation of the information systems.

Catell remains chairman and CEO of the new company. Eastern CEO J. Atwood Ives and EnergyNorth CEO Robert R. Giordano retired from active management. Ives will become a KeySpan director. Headquarters will remain in New York, however, there will also be a Boston office.

The Eastern/EnergyNorth acquisition was first announced a year ago as a friendly deal (see NGI, Nov. 8, 1999). At the time Eastern was in the process of completing the takeover of EnergyNorth, its third LDC in two years. Eastern also owns and operates Boston Gas, Colonial Gas, and Essex Gas, and along with EnergyNorth, serves more than 800,000 gas customers in Massachusetts and New Hampshire.

Brooklyn Union distributes gas to 1.6 million customers in New York City and on Long Island. Other KeySpan companies market a portfolio of energy services in the Northeast, operate electric-generation plants in New York City and on Long Island, and provide operating and customer services to 1.1 million electric customers of the Long Island Power Authority.

Carolyn Davis, Houston

©Copyright 2000 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus