NGI The Weekly Gas Market Report
After a long, drawn-out regulatory process, Nipsco Industries(NI) finally completed its merger with Massachusetts-based BayState Gas Co., giving the Indiana-based holding company a powerfulEast Coast influence. The $780 million merger originally wasannounced in December 1997 and was expected to close before the endof 1998. Final documents were signed last Friday.
Under the terms of the agreement, Bay State and its subsidiary,Northern Utilities Inc., will become wholly-owned subsidiaries ofNI. Each share of Bay State common stock will be converted into theright to receive $40 in cash, or 1.4 shares of NI common stock asdetermined by the average NI closing price reported in the WallStreet Journal for the 20 days ending Feb. 9. Bay State will stilloperate with local management, employees and directors. No layoffsare expected to result from the merger.
“I think lots of people are wondering why it took so long,” saidNipsco spokesperson Kris Falzone. “There were no snags, andactually state approvals have been in since last fall. It was justa matter of getting through the SEC. Dotting the ‘i’s and crossingthe ‘t’s.”
Nipsco CEO Gary Neale said the delay will cause a small problembecause Nipsco did not have access to Bay State’s Northeast marketsduring a critical time. “[Earnings] will be slightly less becausewe missed the premier earnings month, which is January in thisbusiness. We are not ready to re-forecast yet until we get ourhands on the books.” Neale said previous projections had the mergeradding $0.04-$0.05 per share.
Ed Tirello, an analyst with BT Alex Brown, gave Nipsco highmarks for the move. “It gives them a very good foothold to accessthe East, which seems to be the popular thing these days. Thishelps Nipsco not only in terms of gas, but Bay State also has verygood energy service assets that Nipsco can now utilize. I thinkNipsco has done a very good job of implementing the strategy ofdrawing a line from the Southwest to the Northeast, then buyingalong that line.” Tirello added that the deal should be accretivein its first full year of operation.
Falzone said the big winner of this deal will be the Bay Statecustomers, who will receive a five-year rate freeze of their basicgas rate. The customers will also benefit from receiving their gasfrom a larger company that can offer a variety of services alongwith reliable gas.
“Our merger with Nipsco Industries will provide Bay State thesize and scope we need to succeed in the changing energy markets ofthe future,” said Roger Young, chairman of Bay State Gas, whichserves 305,000 natural gas customers in Massachusetts, NewHampshire, and Maine.
©Copyright 1999 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.
© 2020 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 1532-1266 |