Northeast Utilities and NSTAR have agreed on a merger that would create one of the country’s largest utilities with an enterprise value of $17.5 billion. The combined company would be called Northeast Utilities and would have 500,000 natural gas customers as well as three million electric customers.

The companies intend to combine in an all-stock “merger of equals” to create a company that would provide electricity and natural gas to more than half of the energy customers in New England. It would operate six regulated electric and gas utilities in three states and would have nearly 3.5 million electric and gas customers. Northeast Utilities would have nearly 4,500 miles of electric transmission lines, 72,000 miles of electric distribution lines and 6,000 miles of gas distribution lines. Dual headquarters would be in Hartford, CT, and Boston, MA.

“The combination of Northeast Utilities and NSTAR will create a great New England based company, assuring the regional benefits of a locally controlled energy company for years to come,” said Northeast Utilities CEO Charles W. Shivery. “Our companies already have a strong track record of working together for New England.”

The combined company would have a rate base of $10.8 billion. Fifty-four percent of that would come from electric distribution; 31% would come from electric transmission; 4% would come from power generation; and 11% would be from gas distribution, the companies said.

NSTAR shareholders would receive 1.312 Northeast Utilities common shares for each NSTAR share that they own in a transaction with a total equity value of $9.5 billion. It is anticipated that Northeast Utilities shareholders would own approximately 56% and NSTAR shareholders would own approximately 44% of the combined company.

Hartford-based Northeast Utilities operates New England’s largest utility system with annual revenues of $5.4 billion and assets of $14.2 billion. Its companies in Connecticut, New Hampshire and Massachusetts serve more than 2.1 million electric and natural gas customers in nearly 500 cities and towns. NSTAR, headquartered in Boston, has annual revenues of $3 billion and assets of $8 billion and serves 1.4 million customers in Massachusetts, including approximately 1.1 million electric distribution customers in 81 communities and 300,000 natural gas distribution customers in 51 communities.

The deal is subject to shareholder approval and antitrust review, as well as reviews by other state and federal agencies.

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