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Last Updated: Monday, 27 February 2006, 13:19 GMT
National Grid buys US gas company
US workers replacing a gas pipe

UK utility group National Grid has agreed to buy US gas distributor Keyspan for $7.3bn (4.1bn) in cash.

Keyspan is America's fifth-largest gas distributor, with more than 2.6 million gas customers. It also supplies power to 1.1 million customers.

National Grid will also take on $4.5bn in debt, but says the deal will lead to annual savings of $200m when completed.

"Keyspan is a natural extension of our business and our strategy," said National Grid chief Roger Urwin.

"It fits strategically, operationally and geographically," he added.

The deal still needs to win the backing of both National Grid and Keyspan's shareholders, as well as regulatory approval in the US and UK, before it can go ahead.

US push

National Grid has been keen to boost its presence in the US, where it currently makes about 40% of its profits.

Last month, it bought gas distribution assets in Rhode Island from Southern Union.

The UK firm currently distributes power to around 3.3 million customers in the north-eastern US and gas to 500,000 consumers in New York state.

As well as its supply and distribution business, New York-based Keyspan also has natural gas storage and pipeline assets.

The firm's earnings came in at $1.5bn for the year to December 31, compared with $900m last year.

National Grid owns and operates the electricity transmission network that takes power from generators to regional suppliers in England and Wales.

It also runs the UK's main gas transport network.

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