Exhibit 99.1
KEYSPAN ENERGY TO ACQUIRE EASTERN ENTERPRISES IN
STRATEGIC COMBINATION FOR APPROXIMATELY $2.5 BILLION
__Creates Largest Gas Distribution Company in the Northeast
Brooklyn, NY and Weston, MA __November 4, 1999 __ KeySpan Corporation [NYSE:
KSE] ("KeySpan Energy") and Eastern Enterprises [NYSE: EFU] today announced that
the companies have signed a definitive merger agreement under which KeySpan
Energy will acquire all of the common stock of Eastern Enterprises for $64.00
per share in cash. This represents a premium of 24% over the Eastern Enterprises
closing price of $51.56 on Wednesday, November 3, 1999, and a 45% premium over
the average of the last 90_day trading period. The transaction has a total value
of approximately $2.5 billion ($1.7 billion in equity and $0.8 billion in
assumed debt and preferred stock). The transaction will be accounted for as a
purchase and will be immediately accretive to KeySpan Energy's cash earnings per
share and will turn accretive to the company's earnings per share in the second
year after closing.
Robert B. Catell, chairman and chief executive officer of KeySpan Energy,
commented, "Together KeySpan Energy and Eastern share a common vision as to the
great potential of the markets we serve. Our combined companies will serve 2.4
million customers and will be strong competitors in the emerging energy markets.
This merger is consistent with our vision for growth, and with the addition of
Eastern's unregulated businesses, accelerates our plans to become a full service
energy company. We look forward to working with Eastern's well_regarded
management team to continue to provide safe and reliable energy services to
customers throughout the Northeast and to build future value for all of KeySpan
Energy's shareholders.
"This combination provides an excellent opportunity to increase growth while
introducing geographic and regulatory diversity," Mr. Catell continued. "Eastern
Enterprises is by far the largest natural gas distribution utility in New
England, however, there is still significant upside potential due to the
relatively low penetration of customers using gas for heat in the region. This
opportunity is similar to what KeySpan Energy is experiencing on Long Island.
The combined company will employ its considerable marketing expertise and
acclaimed customer service to enhance this growth. The development of new
pipeline capacity and new supply options to New England over the past two years
will certainly help us to grow our customer base.
"In addition, the combined company will have a broad platform for future growth
for the full array of services KeySpan Energy and Eastern Enterprises have been
developing in their non_regulated subsidiaries," Mr. Catell added.
"We have great respect for the Eastern Enterprises employees and look forward to
having them join the KeySpan Energy family. We each have a proud history of over
100 years of positive community involvement and look forward to continuing that
tradition," Mr. Catell concluded.
J. Atwood Ives, Eastern chairman and chief executive officer, commented,
"Eastern's Board of Trustees and management have concluded an extensive twelve
week review and analysis of the company's strategic alternatives. The choice of
KeySpan Energy as our partner for the future will bring immediate and long_term
benefits to our customers, shareholders, employees and the communities we serve.
The increased size and scope of the combined organization will enable us to
provide enhanced, cost_effective customer service and to capitalize on the
above_average growth opportunities for natural gas in the Northeast and provide
additional resources to our unregulated businesses."
Mr. Ives concluded, "We have known and respected Bob Catell and his management
team for many years. We share their vision that together we can build the
premier full service energy company in the Northeast." The combined company will
have assets of $8.8 billion, $4.3 billion in revenues, and EBITDA of
approximately $950 million.
KeySpan Energy expects pre_tax annual cost savings will be approximately $30
million. These cost savings result primarily from the elimination of duplicate
corporate and administrative programs, greater efficiencies in operations and
business processes, and increased purchasing efficiencies. KeySpan Energy
expects to achieve reductions due to the merger through a variety of programs
which would include hiring freezes, attrition and separation programs. All union
contracts will be honored.
KeySpan Energy expects to raise $1.7 billion of initial financing for the
transaction in short term markets which will ultimately be replaced with long
term financing. Going forward, KeySpan Energy will actively manage its balance
sheet to maintain strong investment grade ratings at each of its rated entities.
KeySpan Energy anticipates continuing its current annual dividend of $1.78.
Eastern Enterprises will continue to pay its dividend at the annual rate of
$1.72.
Mr. Catell will remain chairman and CEO of the combined company. Upon completion
of the transaction, Mr. Ives will retire from active management at the company
and will join the KeySpan Energy board of directors. KeySpan Energy's
headquarters will remain in New York.
Boston will serve as the New England headquarters for the combined company.
The merger is conditioned, among other things, upon the approval of Eastern
Enterprises shareholders, the Securities and Exchange Commission and the New
Hampshire Public Utility Commission. The company anticipates that the
transaction can be completed in
9 to 12 months.
J.P. Morgan & Co. acted as financial advisor and Simpson Thacher & Bartlett
acted as legal counsel to KeySpan Energy. Salomon Smith Barney acted as
financial advisor and Ropes & Gray acted as legal counsel to Eastern
Enterprises.
In connection with the merger, Eastern Enterprises has amended its merger
agreement with EnergyNorth, Inc. to provide for an all cash acquisition of
EnergyNorth shares at a price per share of $61.13. The restructured EnergyNorth
merger is expected to close contemporaneously with the KeySpan Energy/Eastern
Enterprises transaction.
Eastern Enterprises owns and operates Boston Gas Company, Colonial Gas Company,
Essex Gas Company, Midland Enterprises Inc. Transgas Inc. and ServicEdge
Partners, Inc. Upon completion of the pending merger with EnergyNorth, Inc.,
Eastern will serve over 800,000 natural gas customers in Massachusetts and New
Hampshire. Midland, headquartered in Cincinnati, Ohio, is the leading carrier of
coal and a major carrier of other dry bulk cargoes on the nation's inland
waterways. Transgas is the nation's largest over_the_road transporter of
liquefied natural gas. ServicEdge is the largest unregulated provider of
residential HVAC equipment installation and service to customers in
Massachusetts. More information can be found at the company's Web site:
www.efu.com.
KeySpan Energy is a holding company operating two utilities that distribute
natural gas under the Brooklyn Union name to 1.6 million customers in New York
City and on Long Island, making it the fourth largest gas_distribution company
in the United States. Other KeySpan Energy companies market a portfolio of
gas_marketing and energy_related services in the Northeast, operate
electric_generation plants in New York City and on Long Island, and provide
operating and customer services to 1.1 million electric customers of the Long
Island Power Authority. KeySpan Energy's unregulated energy activities focus on
three principal lines of business: gas exploration and development, primarily
through The Houston Exploration Company (NYSE: THX); domestic pipelines and
storage; and international activities, including gas_processing in Canada, and
gas pipelines and local_distribution in Northern Ireland. More information can
be found at the company's Web site:
www.keyspanenergy.com.
Certain statements contained herein are forward_looking statements, which
reflect numerous assumptions and involve a number of risks and uncertainties.
Actual results may differ materially from those discussed in such statements.
Among the factors that could cause actual results to differ materially are:
available sources and cost of fuel; State and Federal regulatory initiatives
that increase competition, threaten cost and investment recovery, and impact
rate structures; the ability of the Company to successfully reduce its cost
structure; the ability of the Company to successfully integrate acquired
operations; the degree to which the Company develops non_regulated business
ventures; the effect of inflationary trends and increases in interest rates; the
ability of the Company and its significant vendors to modify their computer
software, hardware and databases to accommodate the year 2000; and risks
detailed from time to time in reports and other documents filed by the Company
with the Securities and Exchange Commission.
Contacts for KeySpan Energy: Contacts for Eastern Enterprises:
Name: Robert J. Mahony Name: Jane W. McCahon
Phone: 718.403.2503 Phone: (781) 647_2316
Name: Michael J. Taunton
Phone: 718.403.3265