Support the news
Northeast Utilities is poised to become one of the largest utility companies in the nation. The Connecticut-based utility is buying Boston-based NStar for more than $4 billion in stock.
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.
NStar CEO Tom May will become the head of the merged company.
"It's much like if you and I decided to go into a ski house together, and I put up $250,000 and you put up $200,000 because that's what you had at the time, and we went in as partners," May says.
May says there won't be any layoffs, and energy rates will stay the same for the next couple of years.
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 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.
This program aired on October 18, 2010. The audio for this program is not available.
Support the news