KeySpan Corp. has put itself up for sale and followers say one of its pursuers Consolidated Edison Corp. of New York might have to shed properties to complete a sale. Analyst focus on the fact that KeySpan owns the Ravenswood Power Station, which was once owned by Con Ed before the State of New York forced it to shed the 2.45 GW plant to the Brooklyn, N.Y.-based company as part of a state-mandated divestiture. If a merger were to take place the entities would need to unload Ravenswood under New York State law, says Anatol Feygin, analyst at Banc of America Securities in St. Louis.
Feygin adds that Ravenswood could potentially sell for even more than a sale by Reliant Reliant Resources of its New York assets, which fetched $975 million at auction from US Power Generating and Madison Dearborn (PFR, 10/3). That sale was helped in large part by the tightening in the power market in that region recently, with generation needs up to 83% of capacity.
Mike Heim, analyst at A.G. Edwards & Sons in St. Louis, says reported offers for KeySpan at more than $6.5 billion appear low since $6.5 billion translates to $37 a share. Heim says KeySpan could fetch a price closer to $45 a share based on its earnings. National Grid has also expressed an interest in buying KeySpan.