Exhibit 99
FOR RELEASE: DEC. 14, 1998
CONTACTS:
NEES NATIONAL GRID
INVESTORS: INVESTORS:
Bob Seega, 508-389-2178 Jill Sherrett
011-44-171-620-9191
MEDIA:
Until 6:00 a.m.: MEDIA:
Susan Stevens, 617-236-5800 x2811 Margaret Stewart
011-44-171-620-9191
After 6:00 a.m.:
Amy Tull, 508-389-3283
NEES AND NATIONAL GRID TO MERGE IN $3.2 BILLION TRANSACTION
WESTBOROUGH, Mass., Dec. 14, 1998 The National Grid Group plc
(LSE:NGG) and New England Electric System (NYSE:NES) announced today that
they have signed a merger agreement under which National Grid will acquire
all of the outstanding shares of NEES. Under the terms of the agreement,
NEES shareholders will receive $53.75 in cash (subject to upward
adjustment) for each NEES share held. The terms value the equity of NEES
at approximately $3.2 billion and represent a premium of 25% above the
closing price of NEES shares on Dec. 11, 1998.
National Grid is the owner and operator of the England and Wales high-
voltage transmission network, including interconnectors with Scotland and
France. National Grid is the world's largest privately owned transmission
company, and has almost a decade of experience running a transmission
network in a competitive market. It is listed on the London Stock Exchange
with a market capitalization of $12.4 billion.
NEES will become the base of U.S. operations for National Grid, and
will provide a regional platform for growth in transmission and
distribution
"For NEES and our employees, this transaction not only keeps jobs in
New England, it represents a tremendous opportunity for growth as the base
of U.S. operations for a large and successful company. For our customers
and the region, it is an opportunity to benefit from National Grid's proven
track record of delivering high-quality, low-cost transmission service in
the competitive UK market. National Grid's considerable experience should
benefit customers here as the competitive electricity market develops in
the northeast," said Rick Sergel, president and chief executive officer o
NEES.
"Most important, our customers will continue to receive the same great
service from the same people in the yellow trucks, 24 hours a day; and they
will continue to receive rates among the lowest in the region. The only
difference is that we will have the resources of an international leader
behind us," Sergel said.
Commenting on the acquisition, David Jones, chief executive of
National Grid, said: "NEES has a strong reputation for efficient service to
customers, and has already played a prominent role in the regulatory
developments in the region. The chemistry between the management teams is
excellent, and by combining our expertise with that of NEES, I am confident
that as a group we will be able to deliver on the exciting prospects in the
northeast U.S. and continue to enhance value for National Grid
shareholders."
According to National Grid, the acquisition:
o represents a significant investment in an efficient, focused
transmission and distribution business with a strong operational track
record, which will benefit further from National Grid's core skills;
o enhances National Grid's earnings per share before the amortization of
goodwill and significantly enhances National Grid's cash flow per
share immediately following the acquisition;
o provides the right point of entry into the U.S. for National Grid,
given New England's favorable economic climate and its advanced state
of regulatory evolution toward performance-based regulation;
o brings National Grid a high-quality management team with proven
distribution expertise and a shared view of the industry's future
development in the northeast U.S.; an
o provides an excellent regional platform for growth in transmission and
distribution.
Rick Sergel will continue as president and chief executive officer of
NEES and will join the National Grid Board as an executive director,
together with one of NEES's outside directors. Alfred D. Houston, NEES
chairman, will step down upon the closing of the merger, and will serve as
a consultant for two years. A NEES advisory board will be established for
two years.
Upon completion of the acquisition, NEES will become a wholly owned
subsidiary of National Grid. NEES and its subsidiary names will remain the
same. Headquarters for U.S. operations will remain in Massachusetts, and
the strong links forged by NEES with its local communities in
Massachusetts, Rhode Island and New Hampshire will be maintained, according
to National Grid.
The acquisition is subject to a number of regulatory and other
approvals and consents, including approvals by the U.S. Securities and
Exchange Commission, Federal Energy Regulatory Commission, and Nuclear
Regulatory Commission, support from the states in which NEES operates, and
Hart-Scott-Rodino approval. The acquisition also requires approval by
shareholders of both companies, and is expected to be completed by early
2000.
NEES shareholders will receive a cash payment of $53.75 for each share
held when the merger is completed. The cash payment will be subject to an
increase if the completion of the merger does not take place on or before
the date following six months after approval of the merger by NEES
shareholders. The amount of any such adjustment will be determined using a
daily accrual rate of $0.0033 until closing, up to a maximum increase of
$0.60 per share.
Merrill Lynch & Co. served as financial advisor and delivered a
fairness opinion to NEES. Rothschild and Dresdner Kleinwort Benson are
jointly advising National Grid. Dresdner Kleinwort Benson Securities and
HSBC Securities are brokers to National Grid.
More information on the merger agreement and both companies is
available on the NEES web site at www.nees.com, and the National Grid web
site at www.ngc.co.uk.
NEES is a public utility holding company headquartered in Westborough
Mass. Its subsidiaries Massachusetts Electric Company, Narragansett
Electric Company, Granite State Electric Company, and Nantucket Electric
Company serve approximately 1.3 million customers in Massachusetts, Rhode
Island and New Hampshire. Unregulated subsidiaries include AllEnergy, an
energy marketing company, and NEESCom, a telecommunications company.
This document contains statements that may be considered forward looking
under the securities laws. Actual results may differ materially. For a
list of factors that could influence results, please refer to NEES's Form
10-Q for the period ended Sept. 30, 1998. The transaction is also subject
to contingencies as discussed herein.