KeySpan expanded its presence in the Northeast this week, with a$2.5 billion acquisition of Weston, MA’s Eastern Enterprises andManchester, NH’s EnergyNorth. The deal creates the largest naturalgas distribution company in the Northeast and fifth largest in theUnited States, with 2.4 million natural gas customers.

The acquisition, financed with $1.96 billion in equity and theassumption of $550 million in debt, was called a “milestone” byKeySpan CEO Robert B. Catell. The purchase gives the New York-basedcompany assets of more than $10 billion, and projected annualrevenues of $5 billion, primarily from the consolidation of sixutilities in New York and New England.

Catell said the acquisition was a “major step in implementingour strategy of growth and our vision of becoming the premierenergy and services company in the Northeast.” Going further,Catell said KeySpan expects to see “tremendous growth for regulatedand unregulated sales of natural gas and energy-related productsand services throughout the region.”

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

KeySpan expects the acquisition to yield pre-tax annual savingsof approximately $40 million, mostly from eliminating duplicatecorporate and administrative programs, more efficiencies inoperations and business processes, increased purchasingefficiencies and a consolidation of the information systems.

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

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