Spanish power utility Iberdrola SA plans to buy regional utility owner Energy East Corp. for $4.5 billion in cash, giving it a foothold in the United States, the companies announced Monday.
The boards of both utilities, meeting in New York and Madrid, agreed to the deal that would provide Energy East shareholders $28.50 per share, representing a 27 percent premium over Energy East's closing stock price Friday of $22.37.
If the transaction is approved, Energy East's utility subsidiaries that together employ 5,800 workers will continue to operate under their current names: Berkshire Gas Co., Connecticut Natural Gas Corp., New York State Electric & Gas Corp., Rochester Gas and Electric Corp., and The Southern Connecticut Gas Co., in addition to Central Maine Power Co.
The deal, which is expected to close next year, would require approval of shareholders as well as the Federal Energy Regulatory Commission and state agencies.
“It'll be a vigorous analysis,” Kurt Adams, chairman of the Maine Public Utilities Commission, said Monday evening from Canada's Prince Edward Island, where Canadian premiers and New England governors were meeting to discuss energy and the environment.
The deal is of special interest in Maine, where 80 percent of electric customers are served by Central Maine Power Co., an Energy East subsidiary.
Maine Gov. John Baldacci, also in Canada, said he was “cautiously optimistic” about the proposal based on a conversation with CMP President Sara Burns.
He said he planned to meet with company officials upon his return to Maine later this week.
Iberdrola, based in Bilbao in northern Spain, said the plan fits with its strategy of international expansion.
New Gloucester-based Energy East owns utilities in New York, Connecticut, Massachusetts and Maine.
“The combination with Energy East fits with the philosophy of our strategic plan, will serve to enhance the international expansion we initiated several years ago in markets with stable growth, and consolidates our position as one of the world's leading electricity companies,” said Ignacio Galan, Iberdrola's chairman and CEO.
The deal would represent Iberdrola's first direct purchase of a U.S. utility, Burns said.
Iberdrola's previous acquisition of Scottish Power gave it ownership of Oregon-based PPM Energy, which operated several wind farms in the U.S.
Iberdrola's focus on renewable energy will fit well in Maine, and the company is committed to investing in Maine's electric delivery infrastructure, Burns said.
“Once people get to know Iberdrola, get to know their global record, people will see it fits in right where the state wants to move in terms of an energy philosophy,” she said.
Because Iberdrola's operations are managed locally, Energy East's 3 million customers from Maine to New York state would see little change in customer service, said Wes von Schack, Energy East's chairman and CEO.
Before the companies' announcement, Energy East shares gained 17 cents to $22.54 Monday on the New York Stock Exchange.
They climbed $4.96 to $27.50 in after-hours trading.
If the transaction is approved, Energy East's utility subsidiaries that together employ 5,800 workers will continue to operate under their current names: Berkshire Gas Co., Connecticut Natural Gas Corp., New York State Electric & Gas Corp., Rochester Gas and Electric Corp., and The Southern Connecticut Gas Co., in addition to Central Maine Power Co.
The deal, which is expected to close next year, would require approval of shareholders as well as the Federal Energy Regulatory Commission and state agencies.
“It'll be a vigorous analysis,” Kurt Adams, chairman of the Maine Public Utilities Commission, said Monday evening from Canada's Prince Edward Island, where Canadian premiers and New England governors were meeting to discuss energy and the environment.
The deal is of special interest in Maine, where 80 percent of electric customers are served by Central Maine Power Co., an Energy East subsidiary.
Maine Gov. John Baldacci, also in Canada, said he was “cautiously optimistic” about the proposal based on a conversation with CMP President Sara Burns.
He said he planned to meet with company officials upon his return to Maine later this week.
Iberdrola, based in Bilbao in northern Spain, said the plan fits with its strategy of international expansion.
New Gloucester-based Energy East owns utilities in New York, Connecticut, Massachusetts and Maine.
“The combination with Energy East fits with the philosophy of our strategic plan, will serve to enhance the international expansion we initiated several years ago in markets with stable growth, and consolidates our position as one of the world's leading electricity companies,” said Ignacio Galan, Iberdrola's chairman and CEO.
The deal would represent Iberdrola's first direct purchase of a U.S. utility, Burns said.
Iberdrola's previous acquisition of Scottish Power gave it ownership of Oregon-based PPM Energy, which operated several wind farms in the U.S.
Iberdrola's focus on renewable energy will fit well in Maine, and the company is committed to investing in Maine's electric delivery infrastructure, Burns said.
“Once people get to know Iberdrola, get to know their global record, people will see it fits in right where the state wants to move in terms of an energy philosophy,” she said.
Because Iberdrola's operations are managed locally, Energy East's 3 million customers from Maine to New York state would see little change in customer service, said Wes von Schack, Energy East's chairman and CEO.
Before the companies' announcement, Energy East shares gained 17 cents to $22.54 Monday on the New York Stock Exchange.
They climbed $4.96 to $27.50 in after-hours trading.
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