Macquarie, partners to buy Pa.'s Duquesne


July 06, 2006|By BLOOMBERG NEWS

PITTSBURGH -- Funds managed by Macquarie Bank Ltd., Australia's largest securities firm, and several partners agreed yesterday to buy Pittsburgh utility owner Duquesne Light Holdings Inc. for $1.59 billion.

The takeover of the 120-year-old company, which sold its power plants in 2000, gives Macquarie 587,000 customers in southwestern Pennsylvania. Sydney-based Macquarie and funds it controls have spent more than A$2 billion ($1.5 billion) in the past year on purchases, including a Norwegian explosives maker and a United Kingdom ferry company.

"This makes sense for Macquarie," said Barry Abramson, who helps manage $33 billion at Gamco Investors Inc. in Rye, N.Y., including more than 5 million shares of Duquesne Light. "Transmission and distribution companies have stable cash flows and less earnings volatility" than power generators, he said.

The funds will pay $20 a share for Duquesne Light, 22 percent above the closing price on July 3, the companies said yesterday. They will assume more than $1.4 billion in long-term debt and other liabilities.

The planned purchase comes amid a surge in utility acquisitions worldwide. The total value of deals announced this year is $182.2 billion, a pace that would beat the $233.5 billion announced in 2005.

Shares of Duquesne Light soared $2.95, nearly 18 percent, to close at $19.39 yesterday on the New York Stock Exchange in trading of about 5.6 million shares, 12 times the daily average over the past three months. The shares have fallen 13 percent in the past year.

Macquarie Bank fell 29 cents to A$68.71 in Sydney before the statement was issued.

Duquesne Light traces its roots to the first Westinghouse alternating current power plant, built in Pittsburgh in 1886, according to the company's Web site. Duquesne also was the licensee of the first commercial U.S. nuclear plant, the Shippingsport Atomic Power Station, dedicated in 1958.

The company sold its power plants in 2000 under a Pennsylvania law aimed at opening electricity markets to competition.

The Associated Press contributed to this article.

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