Northeast Utilities in $4.17 Billion Merger

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BOSTON (AP) _ Northeast Utilities will buy New England energy company Nstar in a stock-for-stock deal valued at $4.17 billion, forming one of the biggest utility companies in the country.

The combined company, will own six regulated gas and electric utilities serving nearly 3.5 million customers in Connecticut, Massachusetts and New Hampshire. Northeast Utilities and Nstar said that customers will not experience any rate change related to the transaction.

The transaction is worth $40.28 per share, a 2 percent premium to Nstar’s closing price Friday. Each Nstar stockholder will receive 1.312 Northeast shares for each share they own.

The companies called the deal a merger of equals. However, after the deal closes Northeast Utilities stockholders will likely own about 56 percent of the combined business. Nstar shareholders will own approximately 44 percent. The combined company will also take the Northeast Utilities name.

The companies plan to increase Northeast Utilities’ dividend to a level equal to Nstar’s dividend once the transaction is complete.

Northeast Utilities and Nstar plans to invest $9 billion in New England’s energy infrastructure over the next five years.

Northeast Utilities Chairman, CEO and President Charles W. Shivery will become the non-executive chairman of the combined company for a period of 18 months. Nstar Chairman, President and CEO Thomas J. May will serve as president and CEO of Northeast Utilities and assume the additional role of chairman after the 18-month period.

The combined company will have headquarters in Boston, where Nstar is based, and Hartford, Conn., the home of Northeast Utilities. Its board will consist of a combination of trustees from both companies, including seven members nominated by the board of Northeast Utilities and seven members nominated by Nstar’s board, with the lead trustee nominated by Northeast Utilities’ board.

The transaction must receive approval from two-thirds of the outstanding share of both companies. It must also be reviewed by a number of federal and state energy authorities, including the Massachusetts Department of Public Utilities, the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission, the Securities and Exchange Commission and the Federal Communications Commission.

The regulatory approvals are anticipated to be received within nine months to a year.

The deal is expected to add to Northeast Utilities earnings in the first year after its closing. Shareholder approval for the transaction will be sought in early 2011, the companies said Monday.

(Copyright 2010 by The Associated Press.  All Rights Reserved.)

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