New Century, Northern States OK Merger

New Century Energies Inc. and Northern States Power Co. agreed to a $4.9-billion merger, creating a company that will sell electricity and natural gas in 12 states in the West and Midwest. New Century shareholders will own 54% of the new company and receive 1.55 of its shares for each current share, at a value of $42.24. Northern States shareholders will get one new share. The new company has not been named. Denver-based New Century and Minneapolis-based Northern States expect their merger to save $1.1 billion in the first 10 years. They will have about 3 million power and 1.5 million gas customers, stretching from Texas to Canada. The merger also allows New Century to expand into the power plant development business through Northern States’ NRG Energy unit, said Robert Rubin, an analyst with Bear, Stearns & Co. The deal requires approval from several regulatory agencies, and one obstacle to clearance could be the companies’ distance from each other. Regulatory delays prompted Northern States to call off a planned union with Wisconsin Energy Corp. of Milwaukee in 1997, more than two years after it was announced. New Century shares dropped $2.19 to close at $36.50, while Northern States fell $1.06 to close at $26.19. Both trade on the NYSE.