Spain's Iberdrola to Buy Energy East

New England utility Energy East (EAS Quote) agreed to be acquired by Spain's Iberdrola for about $4.5 billion.

The deal calls for Iberdrola to pay $28.50 a share in cash, representing a 26% premium over Energy East's closing price Monday. Including debt, the deal is valued at $8.6 billion, the companies said.

Energy East, based in Maine, serves about 3 million customers in upstate New York and New England. Iberdrola said the purchase is in line with its plans to expand in the U.S. and invest in so-called clean energy policies.

The deal, subject to shareholder and government approval, is expected to close in 2008.

Shares of Energy East were surging $5.01, or 22%, to $27.55 in after-hours trading.