SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant |X| Filed by a Party other than the Registrant | | Check the appropriate box: | | Preliminary Proxy Statement | | Confidential, for Use of the Commission only (as permitted by Rule 14a-6(e)(2)) | | Definitive Proxy Statement | | Definitive Additional Materials |X| Soliciting Material Pursuant to Rule 14a-12 Energy East Corporation - -------------------------------------------------------------------------------- (Name of Registrant as Specified in its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): |X| No fee required. | | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: | | Fee paid previously with preliminary materials. | | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: IBERDROLA REACHES AN AGREEMENT TO ACQUIRE ENERGY EAST FOR $4.5 BILLION ((euro)3.4 BILLION) THE AGREEMENT REINFORCES THE GLOBAL LEADERSHIP OF IBERDROLA IBERDROLA's strong global energy platform is enhanced with Energy East. Combined company will better address the region's energy demand and climate issues o Under the terms of the transaction, the shareholders of Energy East would receive $28.50 in cash per share at closing o On completion, the new group will have 24 million electricity points of supply, 3.0(1) million gas points of supply, and installed capacity of nearly 42,000 megawatts (MW), of which more than 17,500 (including large-scale hydro) will be from renewable energy o The transaction accelerates the achievement of the internationalization objective in IBERDROLA's Strategic Plan, approved in October 2006, and allows the tax optimization of IBERDROLA's current position in renewable energies in the US o The transaction creates a platform for IBERDROLA's future growth in the US o Transaction is expected to be immediately accretive upon completion in terms of earnings and cash flow per share BILBAO, Spain and PORTLAND, Maine, June 25, 2007: The Boards of IBERDROLA S.A. and Energy East Corporation (NYSE: EAS), meeting today in Madrid and New York, respectively, have approved a merger agreement under which IBERDROLA will acquire 100% of Energy East, which will become part of the IBERDROLA group. According to the terms of the merger agreement, the shareholders of Energy East would receive $28.50 in cash per share at closing, representing a premium of 20.2% over Energy East's average closing stock price for the 30 day period ending June 22, 2007 (27.4% over Energy East's closing stock price on June 22, 2007). The transaction values Energy East at approximately 6,400 million euros ($8.6 billion) in terms of enterprise value (market equity value plus net debt). IBERDROLA will analyze different financing alternatives for the transaction and will select the one which best meets its requirements from the point of view of maintaining its financial solidity and ratings. The transaction is subject to approval by the shareholders of Energy East, Federal and State authorizations, and other customary closing conditions and is expected to close in 2008. ________________________ (1) Iberdrola figures include gas customers (0.2 million in Spain and 1.9 million in the UK). IBERDROLA Chairman and CEO, Ignacio Galan said, "The combination with Energy East fits with the philosophy of our Strategic Plan, will serve to enhance the international expansion we initiated several years ago in markets with stable growth, and consolidates our position as one of the world's leading electricity companies." Galan said "the acquisition of Energy East will allow IBERDROLA to strengthen its commitment to shareholders, improving Group results, dividends and profitability. It will also enhance our commitment to customers, through improved quality of supply, and to society, contributing to sustainable development thanks to our world leadership in renewable energy and to increased investments devoted to reducing emissions. "This new step in the United States will allow IBERDROLA to continue working with national and State governments to make investments in infrastructure that advance clean energy policies; we welcome Energy East's employees and look forward to leveraging our experience to help address some of the most challenging energy and environmental issues in the Northeastern US," concluded Galan. "This transaction is a unique opportunity to deliver enhanced value to Energy East's shareholders and to build a stronger future for our company, employees and the states we serve," said Wes von Schack, Chairman and Chief Executive Officer of Energy East. "The energy industry is at a major inflection point," continued von Schack. "Policymakers now recognize the need for our industry to make significant investments in our energy infrastructure. Our objective is to team with the States in which we do business to help meet the goals they have established to increase renewable sources of energy, improve energy efficiency, and invest in a secure and reliable energy infrastructure. We believe our combination with IBERDROLA will not only accelerate our progress but will transform the way we do business." "Furthermore, while IBERDROLA is a global energy company, its operations are managed locally. I'm therefore delighted to assure Energy East's three million customers that they can continue to rely on the same local people whom they've come to know and trust to provide exceptional customer service," concluded von Schack. IBERDROLA's expertise and track record in all aspects of delivering sustainable, clean energy make it a strong partner to help support and advance Energy East's efforts. In particular, IBERDROLA has made almost $4 billion in transmission and distribution investments over the past three(2) years and has been successful in initiatives that have reduced customer demand and peak consumption. Its significant engineering and construction resources place it at the leading edge of environmental technologies. IBERDROLA expects to support Energy East's efforts by exploring opportunities to expand its wind generation portfolio, which includes the upstate New York-based Maple Ridge wind generating facility - the largest such facility on the East Coast. As a leading developer of natural gas combined cycle generation, IBERDROLA will also bring construction expertise to Energy East's plans to repower the Russell generating station. A New Step in IBERDROLA's Internationalization Strategy Energy East is a US-based utility company listed on the NYSE, with a strong presence in electricity (1.8 million customers) and natural gas (0.9 million customers) regulated businesses. The company focuses the majority of its activities in four states on the East Coast of the US, and is nationally recognized for its excellent customer satisfaction, reliability and environmental stewardship. This transaction allows IBERDROLA to increase its presence in the US and accelerates the achievement of the internationalization objective set in IBERDROLA's Strategic Plan approved last October. Energy East represents the right platform for IBERDROLA's future growth in the US. A Global Company with a Commitment to Local Operations Following the close of the transaction, Energy East's utility subsidiaries will continue to operate under their current names (The Berkshire Gas Company, Central Maine Power Company, Connecticut Natural Gas Corporation, New York State Electric & Gas Corporation, Rochester Gas and Electric Corporation, and The Southern Connecticut Gas Company). The Enhancement of a Leading Global Utility The integration of IBERDROLA and ScottishPower, in April 2007, represented a milestone for the one hundred year-old IBERDROLA, creating a leading global utility and a world leader in renewable energies. With the Energy East transaction, the enterprise value of IBERDROLA will surpass 83,000 million euros, ($112 billion) at today's values consolidating the company as one of the world's largest electricity operators. _______________ (2) 2005 to 2007. The acquisition reinforces the presence of IBERDROLA, which, upon completion of the transaction, will have 24 million electricity points of supply, 3.0 million gas points of supply, and an installed capacity of nearly 42,000 megawatts (MW). IBERDROLA continues its strategic support for renewable energies, where it is the world leader. Globally, IBERDROLA has 16,500 MW of installed renewable energy capacity (including large-scale hydro), and the company expects to exceed 20,000 MW in the coming years. The transaction also allows IBERDROLA to optimize its current presence in the renewable energy business in the US, the second largest market globally. In addition, IBERDROLA has 2.7 bcm of gas storage capacity in the UK and the US, having significant opportunities to expand this business. Currently, IBERDROLA has operations in Spain, the UK, the US, Mexico, Brazil, Greece, Portugal, France, Germany, Italy, Poland, Guatemala, Bolivia and Chile, and has a significant portfolio of projects that will allow the group to continue growing in the future. Energy East Advisors JP Morgan and Greenhill & Co served as financial advisors to Energy East, and LeBoeuf, Lamb, Greene & MacRae served as legal counsel. NOTE: IBERDROLA and Energy East also issued a joint press release in Spain this morning. ____________________ In connection with the proposed transaction, IBERDROLA may be required to file relevant documents with the SEC. Such documents, however, are not currently available. INVESTORS ARE URGED TO READ ANY DOCUMENTS REGARDING THE POTENTIAL TRANSACTION IF AND WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain a free copy of such documents without charge, at the SEC's website (http://www.sec.gov) once such documents are filed with the SEC. In connection with the proposed transaction, Energy East will file a proxy statement with the Securities and Exchange Commission. Before making any voting or investment decision, investors and security holders of Energy East are urged to carefully read the entire proxy statement, when it becomes available, and any other relevant documents filed with the Securities and Exchange Commission, as well as any amendments or supplements to those documents, because they will contain important information about the proposed transaction. A definitive proxy statement will be sent to the shareholders of Energy East in connection with the proposed transaction. Investors and security holders may obtain a free copy of the proxy statement (when available) and other documents filed by Energy East at the Securities and Exchange Commission's Web site at http://www.sec.gov. The proxy statement and such other documents may also be obtained for free from Energy East by directing such request to Energy East, 52 Farm View Drive, New Gloucester, ME 04260, Attention Marc Siwak. Energy East, its directors, executive officers and other members of its management, employees, and certain other persons may be deemed to be participants in the solicitation of proxies from Energy East shareholders in connection with the proposed transaction. Information about the interests of Energy East's participants in the solicitation is set forth in Energy East's proxy statements and Annual Reports on Form 10-K, previously filed with the Securities and Exchange Commission, and in the proxy statement relating to the transaction when it becomes available FORWARD LOOKING STATEMENTS This communication contains forward-looking information and statements about Energy East and Iberdrola, S.A. and their combined businesses after completion of the proposed transaction. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words "expects," "anticipates," "believes," "intends," "estimates" and similar expressions. Although the managements of Energy East Corporation and Iberdrola, S.A. believe that the expectations reflected in such forward-looking statements are reasonable, investors and holders of Energy East Corporation and Iberdrola, S.A. shares are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Energy East Corporation and Iberdrola, S.A., that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public documents sent by Energy East and Iberdrola, S.A. to their regulators and under "Risk Factors" in their annual and quarterly reports filed with the SEC. Except as required by applicable law, neither Energy East nor Iberdrola, S.A. undertakes any obligation to update any forward-looking information or statements. In addition to the risks and uncertainties set out in SEC reports or periodic reports, the proposed transaction described in this release could be affected by, among other things, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the outcome of any legal proceedings that may be instituted against Energy East Corporation and others related to the merger agreement; failure to obtain shareholder approval or any other failure to satisfy other conditions required to complete the merger, including required regulatory approvals; risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the merger; and the amount of the costs, fees, expenses and charges related to the merger. About Iberdrola: Iberdrola is a global utility with activities in the full value chain of the electricity business from generation to distribution. The main markets where the company operates are Spain, the UK, the US, Mexico and Brazil. Globally the company has approximately 24 million electricity points of supply and almost 40,000 MW of generation capacity of which over 16,500 M.W. are from renewable energies, showing the strong commitment of the company to the environment. About Energy East: Energy East Corporation is a respected super-regional energy services and delivery company serving about 3 million customers in the US throughout upstate New York and New England. By providing outstanding customer service and meeting customers' energy requirements in an environmentally-responsible manner, Energy East will continue to be a valuable asset to the communities it serves. Contacts ENERGY EAST - ---------------------------- ------------------------- Investors Media - ---------------------------- ------------------------- Marc Siwak Clay Ellis 207-688-4336 607-762-7336 - ---------------------------- ------------------------- IBERDROLA - --------------------------------------------- ---------------------------------- International Media Media - --------------------------------------------- ---------------------------------- Jose Fernandez Alava Jose Luis Gonzalez Besada 01134 917 842 337 01134 917 842 303 - --------------------------------------------- ---------------------------------- June 25, 2007 Dear Fellow Employee: I am delighted to tell you that we announced today that Energy East will be acquired by IBERDROLA, a global energy company headquartered in Bilbao, Spain, for approximately $4.5 billion or $28.50 per share in cash. A copy of the press release we issued today is attached along with an FAQ intended to address questions you may have. This transaction is a unique opportunity to build a stronger future for our company, our employees and the states we serve, while also delivering enhanced value to Energy East's shareholders. It is also about being prepared to meet our nation's and states' ambitious and innovative energy objectives, which we totally support. As you know, the energy industry is at a major inflection point. Policymakers now recognize the need for our industry to make significant investments in our energy infrastructure. Our objective is to team with the states in which we do business to help meet the goals they have established to increase renewable sources of energy, improve energy efficiency, and invest in a secure and reliable energy infrastructure. We believe our combination with IBERDROLA will not only accelerate our progress but will transform the way we do business. IBERDROLA is one of the world's largest energy companies with more than 26,000 employees and 24 million customers. IBERDROLA is a leading owner and operator of renewable energy facilities. In fact, it has an installed capacity of over 6,500 MW of wind generation (the largest wind portfolio in the world) and almost 10,000 MW of hydro generation. In the United States, IBERDROLA owns and operates the largest wind facility on the East Coast - Maple Ridge, in upstate New York - and has 19,000 MW under development. IBERDROLA places great emphasis on corporate responsibility and sustainability, and has received many awards for these efforts. For two years running, IBERDROLA has been named "One of the World's 100 Most Sustainable Companies" and in 2007, its Chief Executive Officer, Ignacio Galan, was named the best CEO in the European energy utility sector for the fifth year in a row. (More information about IBERDROLA can be found on the intranet.) I am confident that IBERDROLA's corporate responsibility and sustainability track record, coupled with our own award-winning customer service and operating excellence, will make for a powerful combination. You should also know that IBERDROLA shares the same great respect for its employees as we do, and while IBERDROLA is a global company, its operations are managed locally. o For Energy East's employees, this means that you should not see any significant changes in your day-to-day work life. All union contracts will be honored. In addition, our utility subsidiaries will continue to operate under their current names. o For our customers, this means that they can continue to rely on the same local people whom they've come to know and trust to provide exceptional customer service. We expect the transaction to be completed in 2008 following receipt of the required approvals. Until then, we will continue to operate as a separate company, and it is important that we remain focused on our customers' needs and delivering safe and reliable service. In closing, I want to thank you for your continued hard work and dedication. Meetings will be scheduled in the coming days to discuss today's announcement and to respond to your questions. Sincerely, Wes von Schack Chairman and Chief Executive Officer Please note, as is the case with most transactions, we expect today's announcement may lead to questions from the press and financial community. Please remember our company policy and forward any such calls to Investor Relations: Marc Siwak (207)-688-4336 or Media Relations: Clay Ellis (607)-762-7336. In connection with the proposed transaction, Energy East will file a proxy statement with the Securities and Exchange Commission. Before making any voting or investment decision, investors and security holders of Energy East are urged to carefully read the entire proxy statement, when it becomes available, and any other relevant documents filed with the Securities and Exchange Commission, as well as any amendments or supplements to those documents, because they will contain important information about the proposed transaction. A definitive proxy statement will be sent to the shareholders of Energy East in connection with the proposed transaction. Investors and security holders may obtain a free copy of the proxy statement (when available) and other documents filed by Energy East at the Securities and Exchange Commission's Web site at http://www.sec.gov. The proxy statement and such other documents may also be obtained for free from Energy East by directing such request to Energy East, 52 Farm View Drive, New Gloucester, ME 04260, Attention Marc Siwak. Employee Frequently Asked Questions (FAQs) 1. What did Energy East announce today? We announced today that Energy East will be acquired by IBERDROLA, a global energy company headquartered in Bilbao, Spain, for approximately $4.5 billion or $28.50 per share in cash. 2. What can you tell us about IBERDROLA? Founded more than 100 years ago, IBERDROLA is one of the world's largest energy companies with more than 26,000 employees and 24 million customers. IBERDROLA is also a leading owner and operator of renewable energy facilities. In fact, it has an installed capacity of over 6,500 MW of wind generation (the largest wind portfolio in the world) and almost 10,000 MW of hydro generation. In the United States, IBERDROLA also owns and operates the largest wind facility on the East Coast - Maple Ridge, in upstate New York - and has 19,000 MW under development. IBERDROLA places great emphasis on corporate responsibility and sustainability, and has received many awards for these efforts. For two years running, IBERDROLA has been named "One of the World's 100 Most Sustainable Companies" and in 2007, its Chief Executive Officer, Ignacio Galan, was named the best CEO in the European energy utility sector for the fifth year in a row. More information about IBERDROLA can be found on the intranet. 3. Why does this combination make sense for Energy East? This transaction is a unique opportunity to build a stronger future for our company, employees and the states we serve, while also delivering enhanced value to Energy East's shareholders. It is also about being prepared to meet our nation's and states' ambitious and innovative energy objectives, which we totally support. As you know, the energy industry is at a major inflection point. Policymakers now recognize the need for our industry to make significant investments in our energy infrastructure. Our objective is to team with the states in which we do business to help meet the goals they have established to increase renewable sources of energy, improve energy efficiency, and invest in a secure and reliable energy infrastructure. We believe our combination with IBERDROLA will not only accelerate our progress but will transform the way we do business. 4. Will there be any changes to our workforce as a result of the transaction? You should know that IBERDROLA shares the same great respect for their employees as we do, and while IBERDROLA is a global company, its operations are managed locally. For Energy East's employees, this means that you should not see any significant changes in your day-to-day work life. In addition, our utility subsidiaries will continue to operate under their respective names. 5. Will there be new opportunities for employees in terms of jobs and relocation? Will I be asked to move? While IBERDROLA is a global company, its operations are managed locally, and as such, we do not anticipate that our workforce will be asked to relocate as a result of the transaction. 6. Will there be any changes in employee benefits and compensation? What about retiree benefits? Pensions? IBERDROLA is committed to maintaining competitive benefits and compensation. All union contracts will be honored. In addition, there is no effect on Pension Plan assets or benefits. 7. What happens to shares that I own through my 401K? Those shares will be converted into $28.50 in cash per share in accordance with the terms of the merger agreement. You will be asked to choose a fund in which to invest these proceeds. If you do not make an election, the Company will make one on your behalf in a fund to be determined. 8. Will we keep our name? What about the operating companies? Yes. We enjoy great name recognition and strong customer relationships in our communities. All of our utility subsidiaries will continue to operate under their current names (The Berkshire Gas Company, Central Maine Power Company, Connecticut Natural Gas Corporation, New York State Electric & Gas Corporation, Rochester Gas and Electric Corporation, and The Southern Connecticut Gas Company). 9. Will customers be affected by this transaction? As you know, we have award winning customer service and customer satisfaction rankings. Our customers will continue to enjoy the same level of service provided by the same people who serve them today. Still, the transaction does provide benefits to our customers and the communities we serve. IBERDROLA is a world leader in renewable technologies. In addition, its engineering and construction strength is world-class and currently supports projects in more than 40 countries. These skill sets have enabled IBERDROLA to establish a strong record of working with local communities to address their energy needs and reach their renewable targets. IBERDROLA looks forward to leveraging its experience to advance our company's own efforts and help address some of the most challenging energy and environmental issues in the Northeastern U.S. 10. What are the next steps? How long before the transaction closes? What approvals are required? The acquisition of Energy East by IBERDROLA is subject to, among others, the approval of Energy East's shareholders, the Federal Energy Regulatory Commission and state regulatory authorities in New York, Maine, New Hampshire and Connecticut. The transaction is expected to close in 2008. 11. What should employees expect over the coming months? Until the transaction is completed, we will continue to operate as a separate company and it will remain business as usual. All employees should remain focused on our customers' needs and delivering safe and reliable service. We will keep you informed through our intranet. In addition, employee meetings will be scheduled periodically to provide updates on our progress. In connection with the proposed transaction, Energy East will file a proxy statement with the Securities and Exchange Commission. Before making any voting or investment decision, investors and security holders of Energy East are urged to carefully read the entire proxy statement, when it becomes available, and any other relevant documents filed with the Securities and Exchange Commission, as well as any amendments or supplements to those documents, because they will contain important information about the proposed transaction. A definitive proxy statement will be sent to the shareholders of Energy East in connection with the proposed transaction. Investors and security holders may obtain a free copy of the proxy statement (when available) and other documents filed by Energy East at the Securities and Exchange Commission's Web site at http://www.sec.gov. The proxy statement and such other documents may also be obtained for free from Energy East by directing such request to Energy East, 52 Farm View Drive, New Gloucester, ME 04260, Attention Marc Siwak.