National Grid in talks to buy U.S. gas utility KeySpan |
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Sat, 25 Feb 2006 20:10
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LONDON: Utility company National Grid Plc. announced that it is talking to buy U.S. natural gas distributor KeySpan Corp. While the British company did not divulge details, sources in the know said the price being quoted for the take over is around $7 billion.
The company confirmed in a statement that it is "in discussions concerning a potential transaction with KeySpan, but emphasises that these discussions are yet to be concluded and that there is no certainty that they will lead to any definitive agreement". It said it will be an all-cash deal, supported by borrowings.
The U.S. company, the fifth largest gas distributor in the country, runs gas supply units in New York, Massachusetts and New Hampshire and is very much in line with National Grid's U.S. business, focused in the northeast.
A rival U.S. operator, Consolidated Edison, is also eyeing KeySpan but that deal may attract anti-trust provisions. Analysts in the U.S. said in case the deal goes through, Consolidated Edison would have to sell off KeySpan's Queens, New York-based power plant, Ravenswood, to comply with regulations. Consolidated Edison had sold this plant to KeySpan, when it was forced to separate its energy generation and distribution assets to fulfil regulatory norms.
National Grid owns and operates electricity transmission network that takes power from generators to regional suppliers in England and Wales. It also runs the UK's main gas transport network.
The announcement boosted KeySpan shares, which rose 11 cents to $41.20 on the New York Stock Exchange.
National Grid's shares rose 2.9 per cent to 614-1/2 pence, valuing the group at around 18 billion pounds ($31.6 billion).
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