BEC, Commonwealth set tie
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December 7, 1998: 9:14 a.m. ET
Massachusetts energy providers will merge in cash and stock transaction
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NEW YORK (CNNfn) - BEC Energy and Commonwealth Energy System said Monday their boards have approved a merger in a cash and stock deal.
BEC and Commonwealth, both based in Massachusetts, said they will exchange their shares for a combination of stock in a new holding company and cash.
BEC Energy stockholders may elect to receive 1 share of the holding company's common stock or $44.10 cash for each BEC Energy share they own. The cash price represents a 5 percent premium to BEC Energy's stock price Dec. 4.
Commonwealth stockholders may elect to receive 1.05 shares of the holding company's common stock or $44.10 cash for each Commonwealth share they own, representing a 17 percent premium over Commonwealth's price Dec. 4.
Under the deal, $200 million cash will be allotted to BEC Energy customers and $100 million to Commonwealth stockholders.
Based on 47.2 million shares of BEC Energy and 21.5 million shares of Commonwealth outstanding, BEC stockholders will receive about 42.6 million shares in the new company and $200 million in cash. Commonwealth shareholders will receive about 20.2 million shares and $100 million in cash.
BEC Energy shareholders will about 68 percent of the combined company and Commonwealth shareholders will own about 32 percent.
The deal will result in the loss of about 300 jobs out of a total workforce of about 3,900. The companies said they expect to cut the positions through hiring freezes, attrition and voluntary separation. All union contracts will remain in effect.
The new company anticipates net savings from the merger of about $500 million over 10 years.
The combined company will serve about 1.3 million customers, including about 1,040,000 electric customers in 81 communities and 240,000 gas customers in 51 communities.
BEC (BSE) closed Friday up 1/4 at 42. Commonwealth (CES) was down 9/16 at 37-13/16.
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