NEES agrees to merger with British utility firm

New England Electric System, the parent
company of Narragansett Electric Co.,
announced plans early last week to
merge with a utility company from Great
Britain.
The terms of the deal value NEES at about $3.2 billion, which was about
25 percent above the closing price of NEES shares on Dec. 11, according
to a joint statement issued by NEES and the National Grid Group on Dec.
14.
National Grid Group owns and operates a high-voltage transmission
network in England and Wales and has some facilities in Scotland and
France as well. It is the world’s largest privately owned transmission
company and is valued at about $12.4 billion, according to company
officials.
This particular deal, if it receives all necessary regulatory approvals,
would mark National Grid’s entry to the U.S. energy market.
“For NEES and our employees, this transaction not only keeps jobs in New
England, it represents a tremendous opportunity for growth as the base
of U.S. operations for a large and successful company,” said Rick
Sergel, NEES’ president and chief executive officer. “For our customers
and the region, it is an opportunity to benefit from National Grid’s
proven track record of delivering high-quality, low-cost transmission
service in the competitive UK market.”
Sergel will continue in his position and will join the National Grid
Board as an executive director, along with one of NEES’ outside
directors. NEES Chairman Alfred D. Houston will step down when the
merger is completed and will serve as a consultant.
As a result of efforts to bring competition to the region’s electricity
market, NEES officials sold its New England power plants to U.S.
Generating Co. for $1.6 billion earlier this year. It retained control
only of the wire systems used to deliver electricity to about 1.3
million customers in Rhode Island, Massachusetts, and New Hampshire.
The NEES-National Grid deal is among the first merger deals between wire
companies in the restructured electricity industry. The week before this
deal was announced, the company that owns Boston Edison Co. announced
plans to merge with Commonwealth Energy System of Cambridge, Mass.
NEES shareholders will receive $53.75 in cash for each share held,
according to a company statement. That figure is subject, however, to
“upward adjustment.”