Grid to buy second US firm for $750m
Wednesday 27 January 1999
The acquisition, likely to be announced next week, follows the Grid's $4.2bn purchase last month of New England Electric System (NEES), a much bigger transmission and distribution company based in the same area. At the time of the NEES deal the Grid said it was looking for further bolt- on acquisitions to strengthen its presence in the US market.
The Grid is expected to merge the two businesses once the Eastern Utilities deal goes through, creating efficiency savings. One of the criticisms of the NEES deal was that there was little scope for cost savings because the company was already highly efficient.
The Grid is cash-rich following last week's sale of a pounds 1.2bn stake in its telecoms subsidiary Energis. It plans to reduce its holding further in order to raise finance to expand overseas.
In addition to expanding in the US electricity market, it is also seeking to repeat its success with Energis by building long-distance telecom networks in other parts of the world.
Last week it was selected as part of a consortium to build a second national telecoms network in Brazil. The project will involve an initial equity investment of pounds 400m. The Grid, which has a 50 per cent stake in the consortium, is putting up pounds 200m.
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