October 18, 2010
This morning's wire report that Northeast Utilities (NU) will acquire NSTAR (NST) for $4.3 billion in stock. Not familiar with NSTAR? People in Massachusetts call it Boston Edison or Commonwealth Electric, depending on where they live. A little like we still refer to RG&E, even though the parent-company name has changed over the years.
The merger appears to make sense, with both companies operating on territories alongside one another. If they can run a large combined company with one set of management, financial reporting, etc, then the company can enjoy economies of scale and be more efficient. Or so the story goes. Theories don't always work in practice, but this one is plausible and has tended to work in many other utility mergers. Look for the possibility of more such mergers where comparatively small utilities exist alongside their much larger neighbors.
I will be out of town the rest of this week and much of next and hope to offer some insights through this blog on the state of the global economy and India's place in it.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).