Northeast Utilities (NYSE:NU) and NSTAR (NYSE:NST) today
announced that both companies’ Boards of Trustees have unanimously
approved a definitive merger agreement that will create one of the
nation’s largest utilities, with a total enterprise value of $17.5
billion. The Company will continue to be called Northeast
Utilities.
“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
Charles W. Shivery, Chairman, President and CEO of Northeast
Utilities. “Our companies already have a strong track record of
working together for New England. We recently jointly executed an
agreement to invest $1.1 billion in new transmission lines to
Québec, which will provide low-carbon hydro energy to power one
million homes in New England beginning in 2015.”
“NSTAR’s strong cash flows are very complementary to Northeast
Utilities’ attractive regulated investment opportunities,
mitigating the need for future equity issuances which is a
significant benefit for our shareholders,” continued Mr. Shivery.
“This merger, upon completion, will provide a significant increase
in the dividend for Northeast Utilities shareholders and will
enable long term dividend growth opportunities that are so
important to all of our investors.”
Thomas J. May, Chairman, President and CEO of NSTAR said, “This
is simply the start. Together, with enhanced financial resources,
complementary distribution and transmission assets, reputations for
operating excellence and talented employees, we will be able to
accomplish great things. NSTAR’s very strong balance sheet coupled
with Northeast Utilities’ impressive array of transmission
investment opportunities and diversified suite of distribution
businesses translates into a compelling growth story. Merging with
Northeast Utilities provides more diverse, stable and higher
earnings and dividend growth than NSTAR would have achieved on its
own. It also assures that the long track record of success our
investors have enjoyed in the past will continue.”
Mr. May added, “With this transaction we will create a larger,
stronger and more diversified regulated utility with over 9,000
employees in Massachusetts, New Hampshire and Connecticut, thereby
benefiting our region as a whole. The combined company will have
the scale, employee talent and financial resources to meet the
complex and demanding energy needs of customers across New England
and provide sustainable energy solutions that will support regional
growth.”
The companies will come together in a stock for stock merger of
equals. The combined company will provide electric and gas energy
to over half of the customers in New England.
The combined company will operate six regulated electric and gas
utilities in three states and will have nearly 3.5 million electric
and gas customers. Northeast Utilities will have nearly 4,500 miles
of electric transmission lines, 72,000 miles of electric
distribution lines and 6,000 miles of gas distribution lines.
The transaction is expected to be accretive to Northeast
Utilities’ earnings in the first year following close.
CUSTOMER BENEFITS
The transaction will create many opportunities for the companies
to leverage their combined resources to strengthen service quality
in the various service territories. The two companies have plans to
invest $9 billion in New England’s energy infrastructure over the
next five years. The combined scope and scale of Northeast
Utilities will make investment more cost effective, spread over a
larger customer base, allowing investments on a scale that might
not be attractive to the companies on a stand-alone basis. In
addition, the combined company will share best practices and
implement them over the entire customer base. For example,
Northeast Utilities and NSTAR have been long recognized by many
national and international organizations for the success of their
energy-efficiency programs that, when combined, total more than
$200 million in annual spending.
Customers will not experience any merger-related rate changes.
The merger is expected to produce important long term net savings
as a result of efficiencies. These efficiencies are expected to be
realized over time primarily through process improvements,
voluntary attrition and retirements. Current terms of the
collective bargaining agreements will remain in place.
Both companies have longstanding reputations as excellent
corporate citizens and Northeast Utilities will maintain the
current level of funding for vital civic and philanthropic
organizations across its combined service areas.
TERMS
Under the terms of the agreement, 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 and an enterprise value of $17.5 billion. The exchange
ratio reflects a no premium merger based on the average closing
share price of each company for the preceding 20 trading days.
Following completion of the merger, it is anticipated that
Northeast Utilities shareholders would own approximately 56 percent
and NSTAR shareholders would own approximately 44 percent of the
combined company. The agreement provides that, upon closing of the
transaction, Northeast Utilities’ dividend per share would be
increased to a rate that is equivalent to NSTAR’s dividend per
share, at that time, on an exchange ratio adjusted basis.
ORGANIZATION AND LEADERSHIP
Northeast Utilities will have dual headquarters in Hartford, CT
and Boston, MA.
Upon the closing of the transaction, Charles W. Shivery will
become the Non-Executive Chairman of Northeast Utilities for a
period of 18 months. Thomas J. May will serve as President and CEO
of Northeast Utilities and assume the additional role of Chairman
after 18 months.
The Board of Trustees of Northeast Utilities will be made up of
a combination of Trustees from the two companies, including 7
members nominated by the Board of Northeast Utilities and 7 members
nominated by the Board of NSTAR, with the Lead Trustee nominated by
the Board of Northeast Utilities.
APPROVALS AND TIMING
The merger is conditioned upon, among other things, approval by
two-thirds of the outstanding shares of both companies, the
expiration or termination of any applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and
reviews by federal and state energy authorities. These include the
Massachusetts Department of Public Utilities, the Federal Energy
Regulatory Commission (FERC), the Nuclear Regulatory Commission
(NRC), the Securities and Exchange Commission (SEC) and the Federal
Communications Commission (FCC).
The companies anticipate that the regulatory approvals can be
obtained within 9 – 12 months. The companies intend to seek
shareholder approval of the transaction in early 2011.
ADVISORS
Barclays Capital is serving as lead financial advisor and Lazard
is serving as financial advisor to Northeast Utilities. Skadden,
Arps, Slate, Meagher & Flom LLP is serving as transaction
counsel to Northeast Utilities. Goldman, Sachs and Co., is serving
as lead financial advisor and Lexicon Partners (US) LLC is serving
as financial advisor to NSTAR. Ropes & Gray LLP is serving as
transaction counsel to NSTAR.
CONFERENCE CALL AND WEBCAST
Northeast Utilities and NSTAR will conduct a conference call at
8:30am EDT on October 18, 2010 to discuss the merger. To
participate, please dial (888) 802-8577 (or +1-973-935-8754 if
outside the United States), and enter the access code 19106148,
approximately 15 minutes before the scheduled start of the call.
The conference call will also be accessible live in the Investor
Relations section of both the Northeast Utilities website at
www.nu.com and the NSTAR website at www.nstar.com.
A replay of the conference call will be available online in the
Investor Relations section of both companies’ websites and via
telephone by dialing (800) 642-1687 (+1-706-645-9291 outside the
United States), and entering access code 19106148, beginning
11:30am EDT from October 18, 2010 through 11:59pm EDT on October
24, 2010.
About Northeast Utilities
NU, headquartered in Hartford, operates New England’s largest
utility system with annual revenues of approximately $5.4 billion
and assets of $14.2 billion. NU, and 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.
For more information, go to www.nu.com.
About NSTAR
NSTAR, headquartered in Boston, is an energy delivery company
with annual revenues of approximately $3 billion and assets of $8
billion that 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. For more information, go to www.nstar.com.
Information Concerning Forward-Looking Statements
In addition to historical information, this press release may
contain a number of “forward-looking statements” as defined in the
Private Securities Litigation Reform Act of 1995. Words such as
anticipate, expect, project, intend, plan, believe, and words and
terms of similar substance used in connection with any discussion
of future plans, actions, or events identify forward-looking
statements. Forward-looking statements relating to the proposed
merger include, but are not limited to: statements about the
benefits of the proposed merger involving NSTAR and Northeast
Utilities, including future financial and operating results;
NSTAR’s and Northeast Utilities' plans, objectives, expectations
and intentions; the expected timing of completion of the
transaction; and other statements relating to the merger that are
not historical facts. Forward-looking statements involve estimates,
expectations and projections and, as a result, are subject to risks
and uncertainties. There can be no assurance that actual results
will not materially differ from expectations. Important factors
could cause actual results to differ materially from those
indicated by such forward-looking statements. With respect to the
proposed merger, these factors include, but are not limited to:
risks and uncertainties relating to the ability to obtain the
requisite NSTAR and Northeast Utilities shareholder approvals; the
risk that NSTAR or Northeast Utilities may be unable to obtain
governmental and regulatory approvals required for the merger, or
required governmental and regulatory approvals may delay the merger
or result in the imposition of conditions that could reduce the
anticipated benefits from the merger or cause the parties to
abandon the merger; the risk that a condition to closing of the
merger may not be satisfied; the length of time necessary to
consummate the proposed merger; the risk that the businesses will
not be integrated successfully; the risk that the cost savings and
any other synergies from the transaction may not be fully realized
or may take longer to realize than expected; disruption from the
transaction making it more difficult to maintain relationships with
customers, employees or suppliers; the diversion of management time
on merger-related issues; the effect of future regulatory or
legislative actions on the companies; and the risk that the credit
ratings of the combined company or its subsidiaries may be
different from what the companies expect. These risks, as well as
other risks associated with the merger, will be more fully
discussed in the joint proxy statement/prospectus that will be
included in the Registration Statement on Form S-4 that will be
filed with the SEC in connection with the merger. Additional risks
and uncertainties are identified and discussed in NSTAR’s and
Northeast Utilities’ reports filed with the SEC and available at
the SEC’s website at www.sec.gov. Forward-looking statements
included in this release speak only as of the date of this release.
Neither NSTAR nor Northeast Utilities undertakes any obligation to
update its forward-looking statements to reflect events or
circumstances after the date of this release.
Additional Information and Where To Find It
In connection with the proposed merger between Northeast
Utilities and NSTAR, Northeast Utilities will file with the SEC a
Registration Statement on Form S-4 that will include a joint proxy
statement of Northeast Utilities and NSTAR that also constitutes a
prospectus of Northeast Utilities. Northeast Utilities and NSTAR
will mail the joint proxy statement/prospectus to their respective
shareholders. Northeast Utilities and NSTAR urge investors and
shareholders to read the joint proxy statement/prospectus regarding
the proposed merger when it becomes available, as well as other
documents filed with the SEC, because they will contain important
information. You may obtain copies of all documents filed with
the SEC regarding this proposed transaction, free of charge, at the
SEC’s website (www.sec.gov). You may also obtain these documents,
free of charge, from Northeast Utilities’ website (www.nu.com)
under the tab “Investors” and then under the heading "Financial/SEC
Reports." You may also obtain these documents, free of charge, from
NSTAR’s website (www.nstar.com) under the tab “Investor
Relations.”
Participants in the Merger Solicitation
Northeast Utilities, NSTAR and their respective trustees,
executive officers and certain other members of management and
employees may be soliciting proxies from Northeast Utilities and
NSTAR shareholders in favor of the merger and related matters.
Information regarding the persons who may, under the rules of the
SEC, be deemed participants in the solicitation of Northeast
Utilities and NSTAR shareholders in connection with the proposed
merger will be set forth in the joint proxy statement/prospectus
when it is filed with the SEC. You can find information about
Northeast Utilities' executive officers and trustees in its
definitive proxy statement filed with the SEC on April 1, 2010. You
can find information about NSTAR’s executive officers and trustees
in its definitive proxy statement filed with the SEC on March 12,
2010. Additional information about Northeast Utilities' executive
officers and trustees and NSTAR’s executive officers and trustees
can be found in the above-referenced Registration Statement on Form
S-4 when it becomes available. You can obtain free copies of these
documents from Northeast Utilities and NSTAR using the website
information above.
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