Spain's Iberdrola To Buy UIL Holdings For About $3B

(Reuters) - Spain's Iberdrola SA, through its U.S. unit, will buy UIL Holdings Corp for about $3 billion to create a power and electric utility to be listed in the United States.

UIL shareholders will receive one share in the new company for each share they own plus $10.50 per share in cash, the companies said in a statement.

The proposed deal implies a total value of $52.75 per share, which includes the cash component, representing a 25 percent premium to UIL's closing price on Feb. 25.

"The transaction integrates Iberdrola USA and UIL, is consistent with group strategy and creates a significant company in the United States, a key market in which we are taking a major step forward," said Ignacio Galán, Iberdrola's chairman.

Energy East, now known as Iberdrola USA, delisted from the New York Stock Exchange in 2008 and became a wholly-owned subsidiary of Iberdrola SA.

The new company will serve 3.1 million electric and gas customers across New York, Connecticut, Maine and Massachusetts and would invest $6.9 billion in electric and gas infrastructure over the next five years, the companies said.

UIL Chief Executive James Torgerson will be the new company's CEO. Iberdrola and UIL will continue to have offices in New Haven, Connecticut, Massachusetts, Maine and New York.

The deal, which has been unanimously approved by both companies' boards, is expected to close by the end of 2015. Morgan Stanley served as financial adviser to UIL, while Sullivan & Cromwell LLP and Wiggin and Dana LLP served as legal advisers.