updated 2/27/2006 9:05:53 AM ET 2006-02-27T14:05:53

A British company said Monday it has agreed to a $7.3 billion takeover of Brooklyn-based KeySpan Corp., the largest gas-distribution company in the northeastern U.S.

National Grid PLC said it was paying $7.3 billion cash and taking on an estimated $4.5 billion in debt. The acquisition is to be completed by early next year.

Robert B. Catell, currently chairman and CEO of KeySpan, will join the National Grid board as deputy chairman and will also become chairman of National Grid USA, National Grid said. Michael E. Jesanis will continue as president and CEO of National Grid USA.

"KeySpan will become an important part of one of the largest and most efficient energy delivery companies in the world, and have access to additional financial resources to invest in our energy infrastructure and growth opportunities," Catell said.

The KeySpan head said the deal would "deliver significant value to shareholders and customers of both companies."

The utility's shareholders will receive $42.00 in cash for each KeySpan share held.

"KeySpan is an excellent operational and geographic fit and a natural extension of our business and our strategy," said Roger Urwin, National Grid Group chief executive.

The company's shares were up 32 cents at $41.41 on Friday. National Grid's shares rose 1.4 percent in Monday morning trading on the London Stock Exchange.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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