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Northeast Utilities, NStar Agree to Merge

The transaction has a total equity value of $9.5 billion and an enterprise value of $17.5 billion.

HARTFORD, Connecticut (


) --

Northeast Utilities

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have agreed to merge.

The transaction has a total equity value of $9.5 billion and an enterprise value of $17.5 billion.

NStar shareholders will receive 1.312 Northeast Utilities common shares for each NStar share they own under the terms of the deal. The merger is a no-premium deal based on the average closing stock price of each company for the preceding 20 trading days.

But based on Northeast Utilities' closing price Friday of $30.70, the deal is valuing NStar shares at $40.28. NStar shares ended last week at $39.53.

Once the deal closes, shareholders of Northeast Utilities would own about 56% of the combined company while NStar shareholders would own about 44%. The combined company will be called Northeast Utilities.

It will provide electric and gas energy to more than half of the customers in New England. The new company will operate six regulated electric and gas utilities in three states and have almost 3.5 million electric and gas customers.

"NStar's strong cash flows are very complementary to Northeast Utilities' attractive regulated investment opportunities, mitigating the need for future equity issuances which is a significant benefit for our shareholders," said Charles Shivery, Northeast Utilities chairman and CEO, in a statement Monday. "This merger, upon completion, will provide a significant increase in the dividend for Northeast Utilities shareholders and will enable long-term dividend growth opportunities that are so important to all of our investors."

Northeast Utilities expects the deal to be accretive to earnings in the first year following the close of the merger.

-- Written by Joseph Woelfel

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Joseph Woelfel

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