well. i guess the british may be getting out of the US port industry, but they can make up for it in other ways-

bloomberg.com
http://quote.bloomberg.com/apps/news?pid=10000006&sid=aQpBIeu5Ic.U&refer=home#

National Grid of U.K. to Buy KeySpan for $7.3 Bln, People Say

Feb. 27 (Bloomberg) -- National Grid Plc, the British owner of electric utilities in New York and Massachusetts, agreed to buy KeySpan Corp. for $7.3 billion in cash, an acquisition that almost doubles the number of U.S. customers it serves.

The takeover at $42 a share will be announced as soon as today, said people briefed on the matter who asked not to be identified because the negotiations were private. London-based National Grid, manager of the power and natural-gas systems in the U.K., will also assume more than $4 billion in debt.

Utility mergers have accelerated in the past year as companies seek to expand their geographical reach or offer more services. Brooklyn, New York-based KeySpan has 2.6 million gas customers that will be added to National Grid's operations, which include the former Niagara Mohawk and Massachusetts Electric.

``Overlap allows you to cut costs pretty quickly,'' said Greg Phelps, who oversees $5 billion for John Hancock Advisers in Boston, which owns shares of KeySpan. ``It's the beginning of a trend,'' he said. U.S. utilities have returned to a focus on regulated businesses since the collapse of Enron in 2001 and are now attractive to potential buyers, he said.

While the price is just 59 cents above where the stock ended last week, it's almost $6 higher than the shares traded a week earlier, before the first reports of a possible purchase. Consolidated Edison Inc., the electric utility in New York City, was also negotiating for KeySpan, the people said.

``The stock has been stuck in the low $30 range without a catalyst for moving higher,'' Phelps said. ``As a shareholder, I'd be inclined to vote for the deal.''

National Grid said Feb. 24 that it was negotiating an all- cash acquisition of KeySpan. The U.K. company this month also agreed to buy a Rhode Island gas distributor from Southern Union Co. for $498 million.

Utility Mergers

Last year, $236 billion of utility industry takeovers were announced, almost double the $122 billion in 2004, according to data compiled by Bloomberg.

Suez SA and Gaz de France SA yesterday said they plan to merge, a combination that would create the world's second-biggest power and gas supplier and fend off a possible hostile bid for Suez by Italy's Enel SpA.

Germany's E.ON AG on Feb. 21 offered to buy Endesa SA of Spain for 29.1 billion euros ($34.6 billion), topping a hostile approach from Gas Natural SDG SA.

In the U.S., FPL Group Inc., Florida's biggest utility owner, agreed in December to buy Constellation Energy Group for about $12 billion to obtain nuclear power plants. Chicago-based Exelon Corp. is buying New Jersey's Public Service Enterprise Group for $16.2 billion.

``The market for utilities is heating up,'' Barry Abramson, who helps manage $33 billion at Gamco Investors in Rye, New York, said last week. His firm owns shares of KeySpan, Consolidated Edison and National Grid.

Power and Gas

KeySpan, formed in 1998 through the merger of Brooklyn Union Gas Co. and parts of Long Island Lighting Co., had sales of $6.65 billion in 2004, about the same as National Grid's revenue in the U.S. last year.

KeySpan, the largest gas distributor in the U.S. Northeast, has customers in New York, Massachusetts and New Hampshire and owns a stake in a pipeline. Power plants it owns on Long Island and in New York City make KeySpan the largest electricity generator in the state.

The Long Island power plants were acquired when Long Island Lighting was reorganized by the state because of debts incurred for a nuclear plant that never opened.

National Grid serves about 3.1 million U.S. customers in western and northern New York State, New Hampshire, Massachusetts and Rhode Island. While most get electric service, 540,000 customers in New York State get gas service from the company. The U.S. provides about a third of National Grid's operating profit.

Buying the Rhode Island utility from Southern Union will give National Grid 245,000 gas customers in the state, where it already provides electricity to 477,000 homes and businesses.

To contact the reporters on this story:
Dan Lonkevich in New York at dlonkevich@bloomberg.net;
Jim Polson in New York at jpolson@bloomberg.net.

Last Updated: February 27, 2006 00:09 EST

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