Energy East Corp. to purchase RGS Energy Group Inc. for 1.16 times revenue, The

Weekly Corporate Growth Report, Feb 26, 2001

The Deal: The Energy East Corp. has agreed to purchase RGS Energy Group Inc. for $1.4 billion. The acquisition will create an energy provider serving almost three million customers. The energy concern will serve half of all energy customers in upstate New York.

Discussion: RGS Energy Group Inc. provides electricity to 345,000 customers and gas to 290,000 customers in nine counties. The company has a generating capacity of more than 1,000 MW, about 60 percent of which comes from nuclear power. Through nonregulated subsidiary Energetix, RGS Energy markets electricity, natural gas, gasoline and heating oil and propane throughout upstate New York.

The Energy East Corp.'s main subsidiary, New York State Electric & Gas, distributes electricity and natural gas in upstate New York and Connecticut. In response to deregulation, Energy East has sold its power plants to focus on energy delivery and expanded throughout New England. The company has grown by buying natural gas distributors Connecticut Energy, CTG Resources and Berkshire Energy Resources, as well as CMP Group, the parent of electric utility Central Maine Power. Energy East serves 1.4 million electricity customers and 600,000 natural gas customers.