Northeast Utilities, Nstar Agree to "Merger of Equals"

Northeast Utilities and Nstar yesterday announced that both companies' Boards of Trustees have unanimously approved a definitive stock for stock "merger of equals."

The combined company, to be called Northeast Utilities, will provide electric and gas energy to nearly 3.5 million electric and gas customers, over half of the customers in New England.

The transaction is expected to be accretive to Northeast Utilities' earnings in the first year following close.

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.

Upon the closing of the transaction, current Northeast Utilities CEO Charles W. Shivery will become the Non-Executive Chairman of Northeast Utilities for a period of 18 months. Current Nstar CEO Thomas J. May will serve as President and CEO of Northeast Utilities and assume the additional role of Chairman after 18 months

Northeast Utilities will have dual headquarters in Hartford, Conn. and Boston, Mass.

Northeast Utilities owns Connecticut Light & Power, Western Massachusetts Electric Company, Yankee Gas, and Public Service of New Hampshire, the latter of which retains ratebase generation to serve default service customers. NU and Nstar recently agreed to invest $1.1 billion in a transmission line to import Quebec power into New England; the disposition of such supplies with respect to default service portfolios has still yet to be determined.