Northeast Utilities: Con Ed unwilling to do deal on same terms

Northeast Utilities, Berlin, Conn., Monday said it had been advised by Consolidated Edison Inc. the New York company was not willing to close the parties' pending merger on the previously agreed terms. In a statement, Northeast Utilities said it notified Con Edison it is treating its refusal to proceed on the terms set forth in the parties' merger agreement as a 'repudiation and breach' of the merger agreement. As of late Monday, Con Ed had not responded.
March 5, 2001
2 min read


By the OGJ Online Staff

HOUSTON, Mar. 5�Northeast Utilities, Berlin, Conn., Monday said it had been advised by Consolidated Edison Inc. the New York company was not willing to close the parties' pending merger on the previously agreed terms.

In a statement, Northeast Utilities said it notified Con Edison it is treating its refusal to proceed on the terms set forth in the parties' merger agreement as a "repudiation and breach" of the merger agreement, and that it will file suit to obtain the benefits of the transaction as negotiated for Northeast Utilities' shareholders. As of late Monday, Con Ed had not responded.

Including gas distribution operations of both companies, the combination would have created the nation's largest utility holding company serving 6 million customers.

Con Ed agreed to acquire New England's largest electric utility last year in exchange for $3.29 billion in cash and stock in October 1999. Under the deal, Con Edison agreed to pay $25 per share for all of Northeast's common stock. The company's shares have since traded below that level, reaching a high of $24.56 last year.

The deal has been approved by the shareholders of both companies and by three federal and seven state regulatory agencies. It was awaiting final approval by the US Securities and Exchange Commission.

On Feb. 28, Con Edison said it was reviewing the prospects for the merger agreement reached with Northeast Utilities in light of changes in the New England utility's businesses. Con Edison did not outline the nature of the changes it had in mind. But last October the company said it was reviewing its options after Connecticut regulators imposed a series of stiff restrictions on the proposed acquisition.

Northeast Utilities requested Con Edison provide assurance in writing of its intent to close the merger on the agreed upon terms by Mar. 2. The two companies subsequently agreed to extend the deadline to 5 p.m. Monday.

Michael G. Morris, CEO of Northeast Utilities, said, `"We believe that Con Edison's failure to confirm that it will proceed on the agreed upon terms constitutes a breach of the merger agreement, and we are treating the agreement as effectively terminated.

"We have instructed our attorneys to take appropriate steps to protect our shareholders' interests. Northeast Utilities is a substantially stronger and more valuable company than when we signed the merger agreement, and we see no basis for Con Edison's refusal to proceed on the agreed upon terms.''

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