Northeast Utilities (NU) and NSTAR (NST) said that their shareholders have cast their votes in favor of merging their respective operations. The proposal for merger was put forward in October 2010.
Northeast Utilities, New England’s largest utility system operator, said that about 98% of its shareholders voted in favor of the merger. The company pointed out that it received approval by roughly 140 million shares, out of about 176 million shares outstanding, meeting the requirement of approval from two-thirds of NU’s outstanding shares.
NU shareholders also voted in favor of issuing additional NU shares needed to complete the merger and in favor of fixing NU’s number of trustees at 14.
NSTAR, an electric and natural gas distribution company, also received approval above the required criteria of two-thirds of the outstanding shares. Of the shares voted, NSTAR received about 94% votes in favor of the merger.
In October, Northeast Utilities and NSTAR had agreed to merge in a stock-for-stock deal, creating one of the largest U.S. utility companies with an enterprise value of $17.5 billion. The merged company will retain the name Northeast Utilities.
Under the terms of the merger, Northeast Utilities will issue 1.312 shares for each NSTAR share, with a total equity value of $9.5 billion. On completion, Northeast Utilities shareholders will hold roughly 56% and NSTAR holders will own about 44% of the combined company.
Subject to other conditions, Northeast Uitlities’ first quarterly dividend declared after the completion of the merger will be increased to an amount that is equivalent, after adjusting for the exchange ratio, to the last quarterly dividend per NSTAR share paid by NSTAR prior to the closing.
The merger has already satisfied one closing condition with the expiration of the pre-merger waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The shareholders’ approval of the Federal Communications Commission has satisfied another closing condition. Other state and federal reviews are awaited.
The regulators required to approve the deal include – the Massachusetts Department of Public Utilities, the Federal Energy Regulatory Commission (FERC), the Nuclear Regulatory Commission (NRC) and the Securities and Exchange Commission (SEC).
Following the merger, the combined company will serve roughly 3.5 million customers, providing electric and gas energy to over half of the customers in New England. Northeast Utilities will operate six regulated electric and gas utilities in Connecticut, Massachusetts and New Hampshire. It 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 companies expect the merger transaction to be accretive to Northeast Utilities’ earnings in the first year after completion.
NSTAR (NST): Free Stock Analysis Report
NORTHEAST UTIL (NU): Free Stock Analysis Report
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