Fall River Gas Co., a small LDC serving 47,000 customers inSoutheast Massachusetts, announced last week it received an offerto be bought at a value of $23.50/share, but did not provide anymore details. The company said its board of directors was takingthe proposal under advisement and had formed a committee to reviewits options. If accepted at the announced price, the transactionwould be valued at $51.7 million.

“We’re not going to say who the other party is unless the dealis consummated,” said Peter Thanas, senior vice president of FallRiver. “We’re in a difficult position, and we issued the statementto quell any wild rumors that might get spread about the price ofthe potential offer. One rumor had us selling to Duke for$27/share. Unfortunately, I can’t go any further than what thestatement said.”

While Fall River remained tight-lipped about the possiblemerger, others in the industry openly speculated about who thepotential buyer could be. Providence Energy, Eastern Enterprisesand Energy East were all rumored as the potential buyers.Providence Energy denied the claim, and neither Eastern or EnergyEast returned Daily GPI’s phone calls before press time.

Who would want to and who could buy this company? “The numbersare too voluminous to even get into,” said Donato Eassey, ananalyst with Merrill Lynch. “It’s a small company, and any playercould make the move at that price. It could be a company with aregional focus, like NUI Corp., or it could be a company that isdiversified around the country like a Southern Union.”

Regardless of who the buyer is, Eassey said the continuance ofthe merger trend is more important than this individualtransaction. “The more important aspect is that another smallcompany could very well get swallowed in the Northeast. Thesemerger offers are too good for these small companies to pass up.How can you justify 5% earnings versus a 30% premium? You can’t.The viability of joining a larger company is too great for thesesmall LDCs to pass up.”

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