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Northeast Utilities filed a lawsuit Monday alleging that Consolidated Edison Inc. breached the companies’ 1999 merger agreement. Northeast is seeking more than $1 billion in damages. On March 5, Berlin, Conn.-based NU said the $3.3 billion merger was dead because Con Ed would no longer close the deal on previously agreed-upon terms. NU said at that time that it would sue its New York-based merger partner. But Con Ed sued first. On March 6, the utility asked the U.S. District Court for the Southern District of New York in Manhattan to declare that NU had failed to live up to the merger conditions. Con Ed also asked to be relieved of further obligations under the agreement. If Con Ed is successful, the merger agreement would effectively be scuttled, legal analysts have said. In its filing to the same court Monday, NU said it has incurred substantial monetary damages from the loss of the acquisition premium as well as the “enormous expenditures of time, money and other resources in seeking regulatory approval of the merger.” NU’s suit also alleges it had to pass on other business opportunities while the merger agreement restricted its operations. A Con Ed spokesman said the suit lacks merit. “Con Edison has been and remains in compliance with the terms of its merger agreement with Northeast Utilities,” he said. Douglas M. Kraus, Seth M. Schwartz, Joseph N. Sacca and Jeffrey M. Rosin of New York’s Skadden, Arps, Slate, Meagher & Flom are representing NU. Shearman & Sterling, also of New York, is defending Con Ed. On Wednesday, Connecticut Attorney General Richard Blumenthal asked the state’s Department of Public Utility Control to nullify its Oct. 19 approval of the merger. That agency attached conditions to the deal, which rankled Con Ed. Blumenthal has always opposed the transaction, saying it would negatively impact Connecticut utility customers as well as NU workers. The two utilities had announced their proposed transaction in October 1999. At the time, terms called for Con Ed to acquire NU for $26.70 a share in cash and stock. Industry observers said the proposed merger would have created the largest power company in the Northeast, with six million customers in eight states. Copyright (c)2001 TDD, LLC. All rights reserved.

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