NEES and EUA to Merge in $634 Million Transaction

New England Electric System (NYSE: NES) and Eastern Utilities Associates (NYSE: EUA) have signed a merger agreement under which NEES will acquire all outstanding shares of EUA for $31 per share in cash, subject to upward adjustment.

The merger agreement values the equity of EUA at approximately $634 million.

Upon completion of the merger, EUA's operations will be merged into NEES's. The combined company will serve 1.6 million electricity customers in 228 New England communities.

Rick Sergel, president and chief executive officer of NEES, will be president and chief executive officer of the combined company upon completion of the merger. EUA Chairman and Chief Executive Officer Donald G. Pardus and President and Chief Operating Officer John R. Stevens have opted to retire upon the merger's completion.

EUA board members will be offered positions on the NEES Advisory Board, and Pardus and Sergel will appoint a transition team representing both companies.

The merger is subject to regulatory approvals by the Securities and Exchange Commission, Federal Energy Regulatory Commission, Nuclear Regulatory Commission, and the state utility commissions in Massachusetts and Rhode Island. The merger, expected to be completed in early 2000, also requires approval by EUA shareholders.