National Grid to buy Eastern Utilities Associates

Independent transmission company National Grid Group PLC is preparing a US$800 million to US$1billion bid for Eastern Utilities Associates, industry sources said.

The news emerges little more than a month after the company pounced for New England Electric System (NEES) in a US$3.2 billion agreed deal and comes as little surprise to analysts who had been expecting another smaller bolt-on deal.

The move was foreshadowed last week by Grid finance director Stephen Box, who told AFX News the company was looking to spend around 500 million pounds sterling to bolster its presence on the east coast of the US after raising 1.2 billion pounds sterling selling a further stake in its telecoms off-shoot Energis PLC.

Analysts said Eastern, which serves around 300,000 households in MA and RI, will fit well with the much larger NEES, whose interests are concentrated in the Northeastern US. The analysts also believe that this will be the last major acquisition by the electricity transmission company for a while.

There is also the suggestion that National Grid might come under pressure from institutions to rein back its ambitions stateside.

"There is some skepticism about UK firms driving into the US," Hawkins added. "It has not historically been a happy hunting ground."

Reports today said National Grid is seeking to finalize the purchase as soon as possible so it can include it in filings to US regulators over its recent purchase of New England Electric System. Some observers say the deal will be concluded within the next seven days.

A National Grid spokesperson said the company is staying mum on the rumors, calling them market speculation.