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
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