Analyst predicted rough road for merger

The $4.5 billion takeover of Energy East by Iberdrola was announced on June 25, 2007. At the time, the parties said they expected the deal to be complete by the end of this year's second quarter. That is looking more and more unlikely given the objections by NY regulators who contend that ratepayers will not benefit as the deal is now structured. Of course, Iberdrola and Energy East dispute that claim.

Company officials expected smooth sailing for the deal. But there were some who were not as optimistic.

The Press & Sun-Bulletin quoted a Morningstar analyst who predicted trouble ahead.

In a research note released the week following the acquisition announcement, Ryan McLean, an analyst with Morningstar, of Chicago, said the transaction has several regulatory obstacles to overcome. He said that though there should be major objections, Energy East’s past disputes with regulators, especially in New York, could make the normally smooth road to approval by regulators rougher than expected.

“On balance, we believe the merger chances are good, but not assured,” McLean wrote.