National Grid Group PLC
17 January 2002
National Grid Receives Securities and Exchange Commission Approval for
Niagara Mohawk Acquisition - Acquisition now expected to close by end January
National Grid Group plc ('National Grid') announces that on 16 January it
received approval from the US Securities and Exchange Commission, under the
Public Utility Holding Company Act of 1935, for its acquisition of Niagara
Mohawk Holdings, Inc. (Niagara Mohawk). This is the final regulatory approval
required to complete the acquisition. National Grid expects to close the
acquisition on 31 January 2002.
Roger Urwin, Chief Executive of National Grid Group said, 'Following the
recent shareholder approval of the Scheme of Arrangement, the SEC approval
makes this an excellent start to the New Year for National Grid. We can now
look to implement our integration plans and begin to deliver the benefits of
the Niagara Mohawk acquisition.
'National Grid's US strategy continues to transform the shape and potential of
the company. Niagara Mohawk will double the size of our US business with more
than 60 per cent of the Group's electricity operating profits coming from the
US. The acquisition is expected to enhance earnings per share before
exceptional items and after goodwill amortisation in the first full year after
completion. We are confident that we will meet our objective of earning a
nominal pre-tax return of 10.5 per cent on our expanded US business by the
year ending March 2005, underpinning our target to increase dividends per
share by five per cent per annum in real terms up to 2006.'
In accordance with the terms of the Merger Agreement, Niagara Mohawk
shareholders will receive consideration of $18.89 for each share of Niagara
Mohawk common stock held, valuing the equity of Niagara Mohawk at $3.0 billion
(£2.1 billion). The per share consideration was determined by the average US
dollar price of five National Grid Ordinary shares being $32.22 as calculated
from 20 trading days randomly selected from the 40 consecutive trading day
period 13 November 2001 to 10 January 2002. As the average price is below the
bottom of the range of $32.50 to $51.00 specified in the Merger Agreement, the
base $19.00 consideration per Niagara Mohawk share has been reduced by
two-thirds of the percentage decrease below $32.50.
Niagara Mohawk shareholders can elect to receive their consideration in the
form of $18.89 cash per share, 0.5863 National Grid American Depositary Shares
per share, or a combination of both.
The Merger Agreement states that the total amount of cash payable to Niagara
Mohawk shareholders will be $1.015 billion, but National Grid will increase
this amount to 50 per cent of the total consideration, if it receives
sufficient cash elections. National Grid will, so far as possible, satisfy
Niagara Mohawk shareholders' elections. However, to the extent that they
cannot be satisfied in full they will be scaled down on a pro rata basis.
The deadline for Niagara Mohawk shareholders to return their forms of election
to the Exchange Agent, The Bank of New York, is 5:00 pm (New York time) on 24
January 2002. Election materials and delivery instructions were mailed to
Niagara Mohawk shareholders on 27 December 2001. Niagara Mohawk shareholders
who did not receive that mailing should contact the information agent for this
transaction, Mellon Investor Services, on +1 800 953 2703 as soon as possible.
Mailing and delivery instructions are also available on the companies'
websites at www.nationalgrid.com and www.niagaramohawk.com.
Forward-Looking Statements
This statement contains certain statements that are neither reported financial
results nor other historic information. These statements are forward looking
statements within the meaning of the safe-harbor provisions of the U.S.
federal securities laws. Because these forward-looking statements are subject
to risks and uncertainties, actual future results may differ materially from
those expressed in or implied by the statements. Many of these risks and
uncertainties relate to factors that are beyond the companies' ability to
control or estimate precisely, such as the completion of the acquisition of
Niagara Mohawk, future market conditions and responses by competitors to
deregulation, new regulatory or legislative requirements, the future actions
or decisions of federal or state governmental regulators, the timing and
extent of changes in supply and demand of, and prices of, gas and electricity
and other risk factors detailed in National Grid's reports filed with the SEC.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this document.
ENQUIRIES:
National Grid:
Investors
Marcy Reed +44 (0)20 7312 5779 +44 (0)7768 490807(m)
Terry McCormick +44 (0)20 7312 5785 +44 (0)7768 045139(m)
Karen Shih +1 508 389 3176
Media
Susan Stevens +44 (0)20 7312 5740 +44 (0)7769 671560(m)
Clive Hawkins +44 (0)20 7312 5757 +44 (0)7836 357173(m)
Citigate Dewe Rogerson: +44 (0)20 7638 9571
Anthony Carlisle +44 (0)7973 611888(m)
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