KeySpan Corp. last Tuesday said Institutional Shareholder Services (ISS), the influential proxy advisory firm that advises institutional investors in proxy voting matters, has recommended a vote in favor of KeySpan’s proposed merger with United Kingdom’s National Grid.

The merger, which recently received Hart-Scott Rodino and Exon-Florio approvals, will be presented for shareholder approval at KeySpan’s annual shareholder meeting on Aug. 17. Management requests that all shareholders cast their votes in advance of this meeting.

National Grid and KeySpan announced the agreement to merge in February (see NGI, March 6). National Grid will pay $42 per share in cash in a transaction valued at approximately $7.3 billion, with an enterprise value of $11.8 billion. The boards of both companies unanimously approved the acquisition.

The transaction, National Grid’s fifth U.S. acquisition, creates the third largest energy delivery utility in the United States, with electricity and gas businesses serving nearly eight million customers in the New York state and New England regions.

KeySpan is the fifth largest distributor of natural gas in the United States and the largest in the Northeast, operating regulated gas utilities in New York, Massachusetts and New Hampshire that serve 2.6 million customers. The company also is the largest electric generator in New York state, serving the 1.1 million Long Island Power Authority (LIPA) customers and operating LIPA’s transmission and distribution system under contract. KeySpan serves about 25% of the power needs of New York City.

KeySpan also owns 20.4% of Iroquois Gas Transmission, has a 50% interest in the proposed Islander East pipeline and owns a 20% interest in Millennium Pipeline. It has interests in New York area gas storage facilities as well.

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