CalEnergy Company Inc. subsidiary CE Electric Inc. in mid-July appeared poised to take over New York State Electric & Gas Corp. But NYSEG fought the hostile takeover and won.
Although NYSEG had asked the New York Public Service Commission and the Federal District Court for the Southern District of New York to intervene, in the end, CalEnergy cited "lack of shareholder support" as its reason for terminating its bid.
A takeover attempt. CalEnergy Company Inc. on July 15 announced that its wholly owned subsidiary, CE Electric Inc., had made a tender offer for 9.9 percent of the shares of New York State Electric & Gas Corp., the maximum it could acquire by law without certain regulatory approvals.
"This tender offer is the first step in the intended acquisition of 100 percent of NYSEG's common shares by CalEnergy," wrote David L. Sokol, chair and CEO of CalEnergy in a letter to NYSEG chair, president and CEO Wesley W. von Schack. More than 6.5 million shares were purchased at a price of $24.50 per share.
Sokol also outlined CalEnergy's proposal for acquisition of NYSEG, offering $27.50 for each share of NYSEG common stock, which is a 31.74-percent premium to NYSEG's $20.0875 per share closing price on June 30. He noted that CalEnergy had gained significant experience in competitive markets through ownership of its U.K. electric distribution subsidiary, Northern Electric. Sokol said that experience would be applied to NYSEG as the New York electric markets deregulate. Upon merger completion, CalEnergy had anticipated lowering rates for NYSEG customers.