Iberdrola SA's proposed acquisition of Portland, ME-based Energy East -- which serves 900,000 natural gas customers and 1.8 million electricity customers in Maine, New Hampshire, Massachusetts, Connecticut and New York -- for an estimated $4.5 billion has been authorized by FERC.
Since Spain-based Iberdrola owns no U.S. transmission facilities and owns relatively little generation in the relevant markets, the acquisition does not present vertical or horizontal market power issues, the Federal Energy Regulatory Commission said. Operational control of the merged companies' transmission facilities is with independent system operators in New York and New England, which eliminates the company's ability to use transmission to harm competition, and the two companies have committed to hold transmission and wholesale customers harmless from costs related to the transaction, FERC said.
Iberdrola first announced it intended to acquire Energy East this past summer (see NGI, July 2). With the Energy East transaction, the enterprise value of Iberdrola would surpass $112 billion (83,000 million euros), and it would become one of the world's largest electricity operators. The acquisition would give Iberdrola 24 million electricity points of supply, three million gas points of supply, and an installed capacity of nearly 42,000 MW.
Once the transaction closes, Energy East's utility subsidiaries would continue to operate under their current names: The Berkshire Gas Co., Central Maine Power Co., Connecticut Natural Gas Corp., New York State Electric & Gas Corp., Rochester Gas and Electric Corp. and The Southern Connecticut Gas Co.
Energy East shareholders would receive $28.50/share in cash, which is a 20.2% premium over Energy East's average closing stock price for the 30-day period ending last Friday. The transaction values Energy East at about $8.6 billion (6,400 million euros). The transaction is subject to approval by the shareholders of Energy East and federal and state authorities.
Iberdrola, which has expanded its renewables portfolio with some strategic purchases in recent years, expects to support Energy East's efforts by expanding its wind generation portfolio, which includes the New York-based Maple Ridge wind generating facility -- the largest such facility on the East Coast.
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