National Grid Expands US Presence with KeySpan Acquisition

Strategic Insights -

Britain's National Grid, the owner of the country's gas and electricity transmission networks, has made a significant move in the US energy market with its acquisition of KeySpan, a leading gas distributor in the north-eastern US. The move marks National Grid's fifth US takeover since 2000 and increases its customer base to 7.7 million, making it the country's third-largest gas distributor and seventh-biggest electricity supplier.

National Grid's chief executive, Roger Urwin, dismissed suggestions that the acquisition was a defensive move to protect the company from being taken over itself, citing the limited opportunities for value-creating deals in Europe. The company is paying $7.3 billion for KeySpan's equity, a premium of 2.5% to its 12-month high, and assuming a further $4.5 billion of debt.

The acquisition is part of National Grid's expansion strategy in the US, and the company's new chief executive, Steve Holliday, signaled that there would be more American expansion to come. The deal is expected to be completed early next year, with National Grid's borrowings likely to be around $18 billion.

Key Takeaways:

  • National Grid has acquired KeySpan, a leading gas distributor in the north-eastern US, for $7.3 billion.
  • The acquisition marks National Grid's fifth US takeover since 2000 and increases its customer base to 7.7 million.
  • National Grid's chief executive, Roger Urwin, dismissed suggestions that the acquisition was a defensive move to protect the company from being taken over itself.
  • The company is paying a premium of 2.5% to KeySpan's 12-month high, and assuming a further $4.5 billion of debt.
  • National Grid's new chief executive, Steve Holliday, signaled that there would be more American expansion to come.
  • The UK utility company now has a market capitalization of around $20 billion (approximately £16 billion).
  • The acquisition is expected to be completed early next year, with National Grid's borrowings likely to be around $18 billion.

Statistics:

  • $7.3 billion: the amount National Grid is paying for KeySpan's equity.
  • $4.5 billion: the amount of debt National Grid is assuming as part of the acquisition.
  • 7.7 million: the number of customers National Grid has acquired in the US.
  • 37%: the percentage of homes in Long Island and 50% in New York that are connected to the gas mains.
  • $16 billion: the market capitalization of National Grid (approximately £16 billion).
  • $18 billion: the likely amount of National Grid's borrowings after the completion of the KeySpan acquisition.

Sources:

  • The Financial Times, "National Grid buys KeySpan for $7.3bn"
  • The Wall Street Journal, "National Grid to Buy KeySpan for $7.3 Billion"
  • Reuters, "National Grid to buy KeySpan for $7.3 bln"