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Northern States to merge
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March 25, 1999: 12:29 p.m. ET
Utility joining New Century Energies in $4.9B stock swap
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NEW YORK (CNNfn) New Century Energies and Northern States Power Co. agreed Thursday to a $4.9 billion merger creating a global electric and natural gas heavyweight with $6.4 billion in annual revenue.
In terms of market capitalization, the new company would rank among the top electric and natural gas providers, behind PG&E (PCG) Corp. and Con Edison (ED).
The reach of the combined concern, to be named later, would stretch from Mexico to the Canadian border, plus operations in the United Kingdom, Central Europe, Australia and South America, the companies said.
Under the deal, New Century (NCE) stockholder will receive 1.55 shares of merged company stock for each share of New Century. Each Northern States (NSP) power share will be converted to one share of the combined company. New Century Energies shareholders will own 54 percent of the common equity and Northern States Power shareholders will own 46 percent.
The deal comes at a time when the natural gas industry is hard hit by falling prices. Electric utilities, meanwhile, are preparing to deregulate across much of the country, opening many of them to competition for the first time.
"The merger prepares the combined company for where the industry will be -- an environment of customer choice -- rather than where the industry is today," said James J. Howard, president, chairman and CEO of Northern States Power.
The new Minneapolis-based concern will realize savings of approximately $1.1 billion in the first 10 years, the companies said.
"They will be able to gain the strengths of each other," said Joan Goodman, equity analysts at Pershing & Co. "They are each looking at ways to grow revenue and ways to cut costs."
The merged company will serve 3 million electricity customers and approximately 1.5 million natural gas customers in 12 states including Arizona, Colorado, Kansas, Michigan, Minnesota, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Wisconsin, and Wyoming.
Internationally, it will have about 2 million electric customers and 400,000 natural gas customers in the United Kingdom.
The deal is expected to take 18 months to complete.
Thursday's announcement comes amid a flurry of consolidations in the industry. Earlier this month, El Paso Energy Corp (EPG). said it is buying Sonat Inc (SNT)., creating one of the country's largest natural gas companies in a $6 billion deal. In February, Southwest Gas Corp (SWX). said it got a $970 million takeover bid from Southern Union Co (SUG). after agreeing to be bought by Oneok Inc (OKE). in a deal valuing its stock at about $864 million. The same day Dominion Resources Inc. (D) said it will buy Consolidated Natural Gas Co (CNG) of Pittsburgh for $6.3 billion in stock.
In late-morning trading Thursday, shares of New Century were down 3/8 to 38 5/16. Northern States stock dipped 11/16 to 26 9/16. 
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