National Grid Acquires Keyspan for $7.3 Billion

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Researched by Industrial Info Resources (Sugar Land, Texas)--National Grid, headquartered in the United Kingdom, has completed its acquisition of Keyspan Corporation for $7.3 billion in cash. The acquisition was completed last month when the New York Public Service Commission approved the purchase with a list of conditions. National Grid has accepted to comply with the conditions, and the merger was approved, making the company the third largest energy utility in the United States. It will deliver electricity to approximately 3.3 million customers and natural gas to 3.4 million customers in Massachusetts, New Hampshire, New York and Rhode Island. The company will provide about a quarter of New York City’s electricity needs.

The major hurdle in the list of conditions was the agreement for National Grid to either sell the Ravenswood power plant or enter a long-term, fixed-price contract for the output of the plant, which is situated in Queens, New York. The company has agreed to sell the plant and will hope to announce the winning bidder by the end of the first quarter in 2008. The 2,400-megawatt plant generates power for New York City and Long Island.

Keyspan becomes National Grid’s fifth U.S. acquisition. It acquired Niagara Mohawk in 2002. Keyspan becomes a wholly owned subsidiary of National Grid, which says it will maintain Keyspan’s Brooklyn office and its own Westborough facility.

The company will become part of National Grid U.S. (NYSE:NGG ) with the parent company being National Grid of the United Kingdom. The company has a market capitalization of approximately $42 billion. Besides delivering electricity, National Grid is the largest distributor of natural gas in the northeastern U.S. with more than 3 million customers served.

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