EXHIBIT 2
EASTERN ENTERPRISES AGREES TO ACQUIRE
ESSEX COUNTY GAS COMPANY
Weston and Amesbury, MA. - December 22, 1997 Eastern Enterprises
(NYSE: EFU) and Essex County Gas Company (NASDAQ: ECGC) jointly announced today
that the companies have reached a definitive agreement which provides for the
acquisition by merger of Essex County Gas by Eastern in a tax free,
stock-for-stock transaction. Based on shares outstanding as of December 1, 1997,
the transaction has an equity value of $80.5 million, or $47.50 per share, based
upon the average closing price of Eastern common stock over the 10 day trading
period ended December 6, 1997.
This merger of Eastern and Essex County Gas, to be accounted for as a
pooling of interests, has been approved by both companies' boards. After the
merger, Essex County Gas will operate as a wholly-owned subsidiary of Eastern
and as a sister company of Boston Gas Company, Eastern's gas distribution
company.
Under the terms of the merger agreement, one share of Essex County
Gas Company Common Stock will be exchanged for approximately 1.184 shares of
Eastern Enterprises Common Stock, resulting in a multiple of 2.26x Essex County
Gas' book value. The actual number of Eastern shares to be issued for each Essex
County Gas share will not be less than $45.00 nor more than $50.00, based upon
the average market price during a specified period prior to closing. Using
Friday's closing price of Eastern's common stock of $41.6875 per share, the
number of shares would approximate 1.9 million. Based upon an exchange ratio of
1.184 Eastern shares and Eastern's current indicated annual dividend of $1.64
per share, Essex County Gas' shareholders would receive an effective dividend
increase of approximately 16% to $1.94 per share upon completion of the merger.
J. Atwood Ives, Eastern chairman and chief executive officer
commented, "We welcome Essex County Gas to the family of Eastern companies. We
continue to believe that deregulation provides significant customer and
shareholder incentives for consolidation of gas distribution companies. Eastern
shareholders will benefit from merger-related savings and the potential for
enhanced value going forward. We believe this transaction will not be dilutive
to Eastern's earnings.
"The acquisition of Essex County Gas by Eastern will create
opportunities for cost savings and efficiencies through the integration of their
operations with those of Boston Gas," stated Mr. Ives. "Proposed new rates for
Essex County Gas customers are expected to be filed with the Massachusetts
Department of Telecommunications and Energy ("MDTE"), formerly the Department of
Public Utilities, shortly. These new rates, subject to MDTE approval, are
expected to result in as much as a 5% rate reduction in customers' bills."
Philip H. Reardon, Essex County Gas Company president and chief
executive officer, commented, "This is an excellent transaction for our
shareholders and our customers. Essex County Gas shareholders receive a
significant premium for their shares and Essex County Gas will also benefit from
the merger, as rates are lowered to take advantage of the economies of scale
brought about by the integration with Eastern and Boston Gas operations."
The transaction is expected to close by mid-year 1998, subject to the
receipt of satisfactory regulatory approvals and the approval of Essex County
Gas shareholders.
Essex County Gas Company, based in Amesbury, Massachusetts, is a
local distribution company serving over 42,000 customers in 17 cities and towns
in Northern Massachusetts which are contiguous to town served by Boston Gas. In
its fiscal year ended August 31, 1997, Essex earned $2.38 per share on operating
revenues of $53.5 million.
Eastern Enterprises owns and operates Boston Gas Company, New
England's largest distributor of natural gas, serving 525,000 residential,
commercial and industrial customers in Boston and 73 other eastern and central
Massachusetts communities, and Midland Enterprises Inc., the leading carrier of
coal and a major carrier of other dry bulk cargoes on the nation's inland
waterways, with a fleet of 2,310 barges and 87 towboats. Headquartered in
Cincinnati, Ohio, Midland provides low-cost marine transportation to much of the
country's major industrial and agricultural region.
This release and other company reports and statements issued or made
from time to time contain certain "forward-looking statements" concerning
projected future financial performance, expected plans or future operations.
Eastern cautions that actual results and developments may differ materially from
such projections or expectations.
Investors should be aware of important factors that could cause
actual results to differ materially from the forward-looking projections or
expectations. These factors include, but are not limited to:
- - the effect of strategic initiatives on earnings and cash flow,
- - temperatures above or below normal in Boston Gas Company's service area,
- - changes in market conditions for barge transportation,
- - adverse weather and operating conditions on the inland waterways, changes
in interest rates,
- - regulatory and court decisions, and
- - developments with respect to Eastern's previously-disclosed environmental
and Coal Act liabilities.
All of these factors are difficult to predict and are generally
beyond the control of the Company.
-2-
- --------------------------------------------------------------------------------
Eastern Enterprises' press releases are available via fax by calling,
toll-free, 1-800-311-4607 or on the Internet at Eastern's Home Page on the
World Wide Web:
http://www.efu.com.
Information regarding Essex County Gas Company can be found on the
Internet
at http://www.essexgas.com
- -----------------------------------------------------------------
# # # #
-3-