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Northeast adds gas
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June 15, 1999: 11:18 a.m. ET
Connecticut utility joins industry consolidation with $679M Yankee deal
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NEW YORK (CNNfn) - Northeast Utilities, operator of electric utilities in Connecticut, said Tuesday that it will buy Yankee Energy System Inc., a natural gas distributor, for $679 million, the latest in a string of deals among gas and electric utilities.
Hartford-based Northeast Utilities (NU) said it will pay $45 in cash and stock for each share outstanding of Yankee (YES) stock.
Northeast also will assume about $201 million in Yankee debt under the deal. Yankee will retain its name and become a subsidiary of Northeast, which has about 2.3 million customers in Connecticut, Massachusetts and New Hampshire.
Shares in Meriden, Conn.-based Yankee, the largest natural gas distributor in Connecticut with 183,000 customers, surged up 7-5/8 to 40-1/8 after the announcement Tuesday. Northeast shares were down 3/8 at 16-15/16.
The companies said the merger agreement, which requires regulatory approval, should close in the first quarter of 2000.
"Adding gas to our energy mix will enable NU to broaden services to our existing customers and provide us with a platform to expand throughout the Northeast, where we believe there is substantial opportunity for long-term growth," said Michael G. Morris, Northeast Utilities' CEO.
The announcement that the two Connecticut firms plan to link up followed another deal involving a New England utility announced earlier Tuesday. Energy East Corp. (NEG), based in Albany, N.Y., said it will acquire CMP Group Inc. (CTP) of Augusta, Maine, in a $957 million deal .
A day earlier, Texas-based Dynegy Inc. (DYN) announced that it will buy Midwestern utility Illinova Corp. (ILN) for $7.5 billion in cash, stock and debt, and two other Midwestern companies, Indiana Energy Inc (IEI) and SIGCORP Inc. (SIG), said they were merging in a $1.4 billion deal.
Analysts said that because of deregulation, which has allowed large-scale energy customers to choose among different power suppliers for service, energy companies increasingly are joining forces to achieve economies of scale and offer new services.
"Instead of a fragmented industry of regional monopolies, a new national electricity industry is emerging," said Raymond Niles, an electricity analyst at Schroder & Co. "Scale and scope required to compete in a national electric energy marketplace." 
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