EXHIBIT 99(b)
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, as described later.
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 independent 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 consistently have 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 EUA 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.
Information about NEES is available on the World Wide Web at
http://www.nees.com.
Unregulated NEES subsidiaries include AllEnergy, an energy marketing
company, and NEESCom, a telecommunications company. NEES subsidiaries
employ 3,200 people.
EUA is a public utility holding company headquartered in Boston,
Mass., 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 regulated and unregulated 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.