[CON EDISON LOGO] [NORTHEAST UTILITIES LOGO]
FOR IMMEDIATE RELEASE
CONSOLIDATED EDISON TO ACQUIRE NORTHEAST UTILITIES
IN $19 BILLION STRATEGIC COMBINATION
Creates Nation's Largest Electric Distribution Utility With Over 5 Million
Customers
NEW YORK, NY and BERLIN, CT (October 13, 1999) - Consolidated Edison, Inc.
("Consolidated Edison") [NYSE: ED] and Northeast Utilities [NYSE: NU] today
announced that the boards of both companies have approved a definitive merger
agreement to combine the two companies. Under the agreement, Consolidated Edison
will acquire all of the common stock of Northeast Utilities for $25.00 per share
in a combination of cash and Consolidated Edison common stock, subject in the
case of the common stock, to certain collar provisions.
Northeast Utilities shareholders will have the right to elect cash or stock
subject to proration if the elections exceed 50 percent in cash or 50 percent in
stock. The actual number of shares of Consolidated Edison common stock to be
exchanged for each Northeast Utilities common share will be determined based on
the average trading prices prior to the closing, but so long as such average
trading prices are between $36.00 and $46.00, the total value to the Northeast
Utilities shareholders will be $25.00. The Northeast Utilities shareholders also
have the right to receive an additional $1.00 in value if a definitive agreement
to sell its interests (other than that held by its New Hampshire subsidiary) in
Millstone 2 and Millstone 3 is entered into and is recommended by the Utility
Operations and Management Unit of the Connecticut Department of Public Utility
Control on or prior to the later of December 31, 2000 or the closing of the
merger. Further, the value of the amount of cash or stock to be received by the
Northeast Utilities shareholders is subject to increase by an amount of $0.0034
per share per day for each day that the transaction does not close after August
5, 2000. The stock component of the transaction is anticipated to be tax free to
Northeast Utilities shareholders.
The transaction has a value of approximately $7.5 billion, including Northeast
Utilities' debt, capitalized leases, and preferred securities. The transaction
will be accounted for as a purchase and is expected to be accretive to
Consolidated Edison's earnings per share in the first full year after closing.
The combined company will be the nation's largest electric distribution utility
with over 5 million electric as well as 1.4 million gas customers serving a
diverse mix of urban and suburban communities with a population of more than 13
million. The combined company will have revenues on a pro forma basis of
approximately $11 billion and a total enterprise value of $19 billion ($10
billion in equity; $9 billion in net debt and preferred securities).
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Eugene R. McGrath, chairman, president and chief executive officer of
Consolidated Edison, said, "This strategic combination reinforces Con Edison's
position as one of the leading electric transmission and distribution companies
in the country. This transaction is consistent with our strategy of growing our
core wires and pipes business and enables us to leverage what both companies do
best. The merged company will have a strong, regional foundation, providing us
with the scale and scope necessary to invest in infrastructure, develop advanced
technologies and better serve all customers. Our neighboring service territories
will allow us to generate significant synergies and operating efficiencies.
"Con Edison and Northeast Utilities are natural partners who share a common
vision. As the energy industry evolves, we are confident that, together, we will
leverage our expertise and experience to create new growth in competitive energy
markets," added Mr. McGrath.
"We look forward to working with Northeast Utilities' strong management team to
continue their progress in returning NU to financial and operating stability,"
stated Mr. McGrath. "We welcome Northeast Utilities' capable and experienced
employees to Con Edison. NU and Con Edison share a strong track record of
community involvement and will continue this commitment to the neighborhoods
that we serve."
Michael G. Morris, chairman, president and chief executive officer of Northeast
Utilities, said, "This combination with Consolidated Edison will be good for our
shareholders, employees, customers and communities because it gives us the
financial strength and expanded scope to realize our shared vision.
"The headquarters of the combined company's unregulated businesses and NU's
service company headquarters will be here in Connecticut, thus keeping a major
presence in the state. Our operating companies, The Connecticut Light & Power
Company, Public Service of New Hampshire and Western Massachusetts Electric
Company will retain their names and their local operating presence in their
territories," said Mr. Morris.
"Most importantly, this merger with Consolidated Edison combines two
organizations dedicated to maintaining the highest environmental standards,
while providing superior service to our customers and a stimulating workplace
for our employees," Mr. Morris added.
The companies anticipate substantial merger savings in their regulated and
unregulated businesses, from the elimination of duplicate corporate and
administrative programs and greater efficiencies in operations and business
processes and increased purchasing efficiencies. The companies will seek to
minimize any impact of the merger on the workforce through a combination of
programs including attrition, retraining, reduced hiring and other appropriate
measures. All union contracts will be honored.
The combined company anticipates a continuation of the existing dividend policy
at Consolidated Edison. Consolidated Edison has increased its dividend in each
of the past 25 years; its current annual dividend is $2.14. On September 14,
Northeast Utilities declared its first quarterly dividend in nearly three years
of 10 cents a share payable December 30, 1999. The payment of quarterly
dividends is unaffected by the merger announcement.
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Upon completion of the merger, Northeast Utilities will become a wholly owned
subsidiary of Consolidated Edison, the holding company. Mr. McGrath will
continue as chairman and chief executive officer and Mr. Morris will become
president of the holding company. The board of directors of Consolidated Edison
will be increased to include four members from the board of Northeast Utilities,
including Mr. Morris. The combined company will be headquartered in New York
City. The headquarters of The Connecticut Light & Power Company (CL&P), Public
Service Company of New Hampshire (PSNH), Western Massachusetts Electric Company
(WMECO), Consolidated Edison Company of New York, Inc. and Orange and Rockland
Utilities, Inc. will continue to be located in their respective service
territories.
The merger is conditioned upon, among other things, the approvals of
shareholders of both companies, the Federal Energy Regulatory Commission, the
Securities and Exchange Commission (SEC), the Nuclear Regulatory Commission and
the completion of state regulatory procedures. Consolidated Edison intends to
register as a holding company with the SEC under the Public Utility Holding
Company Act. The companies anticipate that regulatory procedures can be
completed in 12 to 18 months.
Both companies have recently implemented restructuring plans, which have
resulted in significant rate decreases:
Consolidated Edison has been active in promoting competition and is in the
second phase of retail choice for its electric customers with almost 20
percent of its electric load participating in the program. All gas
customers have had a choice of competitive suppliers since 1997.
Consolidated Edison is also in the third year of a 5-year agreement under
which electric customers will receive $1.1 billion in rate reductions. The
rate reductions will grow to 10 percent for customers by 2001.
The three states served by Northeast Utilities are in various stages of
retail competition. One-third of Connecticut's homes and businesses will
be able to choose their electric suppliers on January 1, 2000 with the
balance on July 1, 2000. As part of the restructuring process, CL&P will
implement a five percent rate cut on January 1, 2000 on top of the total
of five percent rate reductions implemented in 1998 and 1999. PSNH,
Northeast Utilities' second largest operating subsidiary, has a settlement
agreement pending at the New Hampshire Public Utilities Commission under
which it will implement an 18.3 percent rate reduction and provide open
access to all customers, after securitization of $725 million of stranded
costs and the after-tax write-off of $225 million of stranded costs. WMECO
already has implemented rate reductions totaling 11.8 percent as part of
the 1998 restructuring of the Massachusetts electric utility industry.
Consolidated Edison plans to continue its $1.0 billion share repurchase program
of which approximately $790 million (or 17.1 million shares) has already been
repurchased. Northeast Utilities expects to repurchase approximately $215
million of its outstanding shares over the next year in connection with its
merger with Yankee Energy System. That acquisition was approved October 12 by
Yankee shareholders and is expected to close in the first quarter of 2000.
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Salomon Smith Barney acted as financial advisor and Cravath, Swaine & Moore
acted as legal counsel to Consolidated Edison. Morgan Stanley Dean Witter and SG
Barr Devlin acted as financial advisors and LeBoeuf, Lamb, Greene & MacRae,
L.L.P. acted as legal counsel to Northeast Utilities.
Northeast Utilities is New England's largest electric utility system, with more
than $4 billion in annual revenues and $10 billion in assets, serving more than
1.7 million customers in Connecticut, Massachusetts and New Hampshire, as well
as in the newly competitive energy markets in Rhode Island, New York and
Pennsylvania.
Consolidated Edison Inc. is one of the nation's largest investor-owned energy
companies, with more than $7 billion in annual revenues and $14 billion in
assets. The company provides a wide range of energy-related products and
services to its customers through its six subsidiaries: Consolidated Edison
Company of New York Inc., a regulated utility providing electric, gas and steam
service to New York City and Westchester County, New York; Orange and Rockland
Utilities Inc., a regulated utility serving customers in a 1,350 square mile
area in southeastern New York State, as well as adjacent sections of northern
New Jersey and northeastern Pennsylvania; Con Edison Solutions, a retail energy
services company; Con Edison Energy, a wholesale energy supply company; Con
Edison Development, an infrastructure development company; and Con Edison
Communications, a telecommunications infrastructure company.
The press release includes forward-looking statements, which are statements of
future expectations and not facts. Actual results or developments might differ
materially from those included in the forward-looking statements because of
factors such as competition and industry restructuring, changes in economic
conditions, changes in historical weather patterns, changes in laws, regulations
or regulatory policies, the failure to successfully address year 2000 problems,
developments in legal or public policy doctrines, technological developments and
other presently unknown or unforeseen factors. Other risk factors are detailed
from time to time in the two companies' SEC reports.
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Note to Editors: Today's news release along with other news about Consolidated
Edison and Northeast Utilities, is available on the Internet at
http://www.coned.com and http://www.nu.com.
Contacts: Consolidated Edison: Northeast Utilities:
Media: Media:
Mary McCartney Mary Jo Keating
(212) 460-4111 (860) 665-5181
Investors: Investors:
Jan Childress Jeffrey Kotkin
(212) 460-6611 (860) 665-5154