Staff Writer
PRESQUE ISLE — In a move that could improve the odds that a transmission line linking Aroostook County with southern Maine and points south, Maine & Maritimes Corporation — parent company of Maine Public Service Co. — announced Friday, March 19, its intention to merge with BHE Holdings, Inc. of Bangor, a subsidiary of Halifax-based Emera Inc. BHE Holdings is the parent company of Bangor Hydro-Electric Co.
Staff photo/Mark Putnam
It was announced Friday that BHE Holdings Inc. of Bangor, a subsidiary of Halifax, Nova Scotia-based Emera, and Maine Public Service Company’s parent company, Maine and Maritimes Corp. have entered into a merger agreement subject to regulatory approval. Representing their respective companies during a press conference at MAM’s corporate office in Presque Isle were top administrators Brent Boyles, left, and Gerry Chasse.
Under the terms of the agreement, all outstanding shares of MAM common stock will be purchased for $45 (U.S.) per share in cash, representing over a 40 percent premium based on MAM’s closing share price on Thursday, March 11 — the last trading day prior to the announcement of the proposed merger — and MAM will become a wholly-owned subsidiary of Emera. The deal has an estimated value of over $100 million.
Officials from both sides agreed the merger would aid in the future growth of the energy market.
“We look forward to serving the customers of northern Maine and building on the strong community reputation established by Maine Public Service Co.,” said Chris Huskilson, president and CEO, Emera Inc. “Maine plays an important role in the Maritime and New England energy market. This merger is an important next step in Emera’s strategy of growth and integration within the Northeast market, by geographically expanding our service territory in Maine to the New Brunswick market.”
According to Brent M. Boyles, president and CEO of Maine & Maritimes Corporation, “This transaction will be very advantageous for our shareholders and electricity customers. Becoming part of Emera strengthens our company financially and enables us to improve reliability and delivery service by working together with Bangor Hydro Electric Company to meet the needs of northern and central Maine customers.”
MAM is the parent company of MPS and MAM Utility Services Group (MAM USG). MPS is a regulated electric transmission and distribution utility serving approximately 36,000 electricity customer accounts in northern Maine. MAM USG is an unregulated corporation that provides electrical services including transmission line and substation design and construction.
Upon completion of the merger, MAM common stock will cease to be publicly traded. There are no immediate plans to reduce staffing levels as Emera contemplates that both MPS and Bangor Hydro will continue to operate separately and serve their customers in their respective service territories. Emera will honor the current collective bargaining agreements in place with the International Brotherhood of Electrical Workers, Local 1837. Additionally, Emera is committed to preserving MPS’s proud heritage and century-old reputation as an active community leader in the region. Following the merger, customers can expect the high level of service and dependability for which MPS is known to continue.
This acquisition will be Emera’s second investment in Maine, following its acquisition of Bangor Hydro Electric Company in October 2001. Emera will initially finance the share purchase from existing credit facilities until long-term financing is arranged. The transaction is expected to be accretive to Emera within the first year.
RBC Capital Markets is acting as financial advisor and Weil Gotshal & Manges LLP as legal counsel to Emera. KeyBanc Capital Markets is acting as financial advisor and Curtis Thaxter Stevens Broder & Micoleau LLC as legal counsel to MAM.
Sens. Olympia Snowe and Susan Collins shared their thoughts on the planned merger.
“I have long been concerned that electricity generated in northern Maine often travels first through Canada because there is no transmission line connecting northern and southern Maine. I spoke with officials from both Bangor Hydro and MPS, and they reassured me that, if this merger is approved, they will work to connect Aroostook County to Maine’s electric grid,” said Collins.
A proposed transmission line that was being considered last year was put on hold when it was discovered that a technical glitch in transmitting power created by such a large wind project — as proposed by Aroostook Wind Energy LLC, when it announced it was interested in establishing a large-scale wind farm project in the county — could have a negative impact on locations to the south of the transmission line, since large amounts of electricity dumped on the grid all at once could black out portions of southern New England. AWE had proposed hundreds of wind turbines, with a total output of 800 megawatts.
Job retention and electrical rates to customers were important issues to both senators as well.
“It is also encouraging news that the companies intend to at least maintain current employment levels,” said Collins.
“With any major energy merger, it is critical that we asses the bottom line to consumers, especially in Aroostook County, which is dealing with 9.8 percent unemployment. I am encouraged that Bangor Hydro is committed to retaining all employees and I look forward to reviewing the specific merger and its effects on building Maine’s clean energy future and making our electricity prices more competitive for our residential consumers as well as our employers,” said Snowe.
According to a joint press release made public Friday, the transaction has been approved by the MAM Board of Directors and is expected to close later this year, subject to approval by MAM’s shareholders and certain regulatory approvals, including the Maine Public Utilities Commission and the Federal Energy Regulatory Commission, as well as other customary closing conditions. Regulatory approvals are estimated to take six to eight months. MAM shareholders will receive proxy materials soliciting their approval for the transaction.
The proposed merger is not without controversy. According to a report in the Mainebiz, “a national law firm that specializes in shareholder rights announced Friday it is investigating the planned acquisition of Presque Isle-based utility Maine & Maritimes by Canadian firm Emera.”
The same day the intention to merge was announced, law firm Levi & Korsinsky LLP — with offices in New York, New Jersey and California — reportedly launched an investigation into whether the deal violates state law.
“Under the terms of the proposed transaction, MAM shareholders will receive $45 in cash for each share of MAM they own. The investigation concerns whether the MAM Board of Directors breached their fiduciary duties to MAM stockholders by failing to adequately shop the Company before entering into this transaction and whether Emera is underpaying for MAM shares, thus unlawfully harming MAM stockholders. In particular, at least one analyst has set a price target for MAM stock at $54 per share,” read a statement on the law firm’s Web site, http://www.zlk.com/regmam1.html.
The Mainebiz article went on to indicated the deal “has also attracted the scrutiny of former state energy director and public advocate Gordon Weil, who told the Maine Public Broadcasting Network the acquisition would mean costs for northern Maine ratepayers ‘will skyrocket by comparison with what they’re paying today.’”
The article concluded with Weil adding, “MPS’s transmission costs are much lower, estimated at about $18 per kilowatt year, compared with the projected New England cost of $116 per kilowatt year.”
