Exhibit 99a
FOR RELEASE: Feb. 1, 1999, 6:00 am
CONTACTS:
NEES EUA
Investors: Investors:
Bob Seega, 508-389-2178 Clifford J. Hebert, 617-357-9590
Media: Media:
Cathy Fair, 508-389-3102 Fred Mason, 508-559-2000 x3662
NEES AND EUA TO MERGE IN $634-MILLION TRANSACTION
Industry Restructuring-Driven Consolidation Continues
WESTBOROUGH, Mass., Feb. 1, 1999 In the latest consolidation driven by
the restructuring of the region's electricity industry, New England Electric
System (NYSE:NES) and Eastern Utilities Associates (NYSE:EUA) announced today
that they have signed a merger agreement under which NEES will acquire all
outstanding shares of EUA for $31 per share in cash, subject to upward
adjustment.
The merger agreement values the equity of EUA at approximately $634
million and represents a 23% premium above the price of EUA shares on Dec. 4,
1998 (the last trading day before other regional merger announcements affected
EUA's share price), and a 5% premium above the closing price on Jan. 29, 1999.
NEES is New England's second largest electric utility, serving 1.3 million
customers through its regulated electric companies in Massachusetts, Rhode
Island and New Hampshire. The company announced on Dec. 14, 1998, that it will
merge with National Grid Group plc, the world's largest privately owned
transmission company, which is based in Coventry, England. Upon completion of
that merger, NEES will become a wholly owned subsidiary of National Grid.
The NEES/EUA merger is not contingent upon the NEES/National Grid merger
closing, but has the full support of National Grid, according to Rick Sergel,
president and chief executive officer of NEES.
EUA is a Boston-based public utility holding company whose subsidiaries
include electric transmission and distribution utilities in southeastern
Massachusetts and northern and south coastal Rhode Island. These utilities
provide electric service to approximately 300,000 customers.
Upon completion of the merger, EUA's operations will be merged into
NEES's. The combined company will serve 1.6 million electricity customers in
228 New England communities. The new company will serve more electricity
customers in both Massachusetts and Rhode Island than any other company.
NEES and EUA have consistently been the two lowest-cost, major electric
companies in the region. It is expected that the geographical fit of the two
companies will result in even greater efficiencies. The companies expect to
file a rate plan with state regulators in the near future, which will maintain
NEES's low rates, and bring EUA's rates to NEES levels in the future.
"This merger of New England's two most cost-conscious electric companies
is a natural fit in philosophy, geography and corporate structure," Sergel
said. "Furthermore, it is the first step in fulfilling the promise of the
NEES/National Grid merger."
"EUA and NEES share a long history of providing customers with high-
quality service at low rates. The synergies between the two companies will
create an even stronger company for our customers," EUA Chairman and Chief
Executive Officer Donald G. Pardus said. "Equally important, NEES and EUA
customers will continue to receive the same great service from the same
people."
Sergel will be president and chief executive officer of the combined
company upon completion of the merger. Both Pardus and EUA President and Chief
Operating Officer John R. Stevens have opted to retire upon the merger's
completion. EUA board members will be offered positions on the NEES Advisory
Board, and Pardus and Sergel will appoint a transition team representing both
companies. EUA Executive Vice President Robert G. Powderly will become
president of New England Power Service Company, NEES's subsidiary that provides
administrative and support services to the other subsidiaries.
"These are the logical steps to take to ensure a smooth transition as EUA
and NEES mesh into a larger, even more efficient, finely tuned operation,"
Pardus said.
The combined company will have approximately 250 fewer positions. "Our
goal is to attain this through voluntary early retirement and attrition,"
Sergel said. NEES will honor EUA's labor contracts.
The merger is subject to regulatory approvals by the Securities and
Exchange Commission, Federal Energy Regulatory Commission, Nuclear Regulatory
Commission, and the state utility commissions in Massachusetts and Rhode
Island. NEES expects to submit all principal regulatory filings, related both
to EUA and National Grid, this month. The merger also requires approval by EUA
shareholders. The merger is expected to be completed by early 2000.
EUA shareholders will receive a cash payment of $31 for each share held
when the merger is completed. The cash payment will be subject to an increase
of $0.003 per share per day if the merger is not completed on or before the
date following six months after approval of the merger by EUA shareholders.
NEES will finance the acquisition in part with cash received from the sale
of its generating business in September 1998.
EUA shareholders will continue to receive dividends at the current level
as declared by the Board of Trustees, until closing of the merger.
Merrill Lynch & Co., Inc. served as financial advisor and delivered a
fairness opinion to NEES, as did Salomon Smith Barney Inc. for EUA.
NEES is a public utility holding company headquartered in Westborough,
Mass. Massachusetts Electric Company serves 970,000 customers in 146
communities, and Nantucket Electric Company serves 10,000 customers on the
island of Nantucket. Narragansett Electric Company serves 330,000 customers in
27 Rhode Island communities, and Granite State Electric Company serves 36,000
customers in 21 New Hampshire communities.
Unregulated NEES subsidiaries include AllEnergy, an energy marketing
company, and NEESCom, a telecommunications company. NEES subsidiaries employ
3,200 people.
EUA is a Boston-based public utility holding company headquartered in
Boston, Massachusetts, whose shares are traded on the New York and Pacific
Stock Exchanges. Subsidiaries include Eastern Edison Co., which serves 184,000
customers in 22 communities; Blackstone Valley Electric Co., which serves
85,000 customers in 7 communities; and Newport Electric Corp., which serves
33,000 customers in 4 communities. Unregulated subsidiaries include EUA
Cogenex Corp. Together, the companies are known as the EUA System. Information
about EUA is available on the World Wide Web at http://www.eua.com.
This news release may contain statements that are "forward looking
statements" under the federal securities law. Actual results could differ
materially from those discussed, and there can be no assurance that estimates
of future results can be achieved. For a list of factors that could influence
results, please refer to the earnings section of NEES's Form 10-Q for the
period ended Sept. 30, 1998. The NEES/EUA merger is also subject to
contingencies as discussed herein. The NEES/National Grid merger is subject to
the contingencies listed in NEES's Form 8-K dated Dec. 11, 1998.