Utilities In Power Merger
New Century Energies Inc. and Northern States Power Co. have agreed to merge in a $4.9 billion deal that creates one of the largest utility companies in the United States, the companies said Thursday.
Upon completion of the merger, each New Century (NCE) share will be exchanged for 1.55 shares of the new company, for a value of $42.24 a share based on Northern States' (NSP) closing price Wednesday. Northern States shareholders will receive one share for each current share.
Shareholders of Denver-based New Century will control 54 percent of the new company.
"This merger combines two well-managed, mid-continent electric and gas companies in order to provide a strong platform during a time of rapid change in the utility industry," said Northern States' chief executive James J. Howard in a statement.
The companies said they expect the merger to result in cost savings of about $1.1 billion in the first 10 years of operations.
Shares of Minneapolis-based Northern States fell 7/16 to 26 13/16 while New Century shares edged up 7/16 to 39 1/8 in recent trading.
The new company will have headquarters in Minneapolis and revenue of $6.4 billion based on last year's results. A name for the new company has not yet been chosen.
Howard will serve as chairman for the first full year of operations. Wayne H. Brunetti, New Century's vice chairman, president and chief operating officer, will be president and CEO when the deal closes and will assume Howard's chairmanship upon his retirement.
New Century's chairman and chief executive Bill D. Helton will retire when the deal closes. The board will be made up of an equal number of members from Northern States and New Century.
The new company will serve 3 million electricity customers and about 1.5 million natural gas customers in Arizona, Colorado, Kansas, Michigan, Minnesota, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Wisconsin, and Wyoming.
It also will have operations in the United Kingdom, Central Europe, Australia and South America.
Written By Lisa J Ulmer, CBS MarketWatch