National Grid expands further into US with £329m gas deal

The company is buying Southern Union's Rhode Island gas distribution business for £285m in cash and taking on a further £44m of debt. The deal comes less than a fortnight after National Grid's chief executive-designate, Steve Holliday, served notice that it planned further US expansion and brings the amount that National Grid has invested in the US over the past five years to more than $15bn (£8.6bn). The US market accounts for about 40 per cent of the group's operations.

The Rhode Island business overlaps with National Grid's existing electricity distribution network in the area, meaning that there will be scope for substantial savings. A National Grid spokesman said there would be savings to be made from reducing the number of call centres and distribution sites on Rhode Island. But he said that all 600 staff employed by the Southern Union subsidiary would be offered jobs by National Grid and any redundancies would be achieved through natural wastage.

The Rhode Island company serves 245,000 customers through 3,000 miles of gas mains. The network overlaps almost entirely with National Grid's electricity distribution company in Rhode Island which supplies 477,000 customers.

This latest deal is the fourth that National Grid has pulled off in the US - all on the north-east seaboard. It broke into the American market in 2000 with the purchases of the electricity transmission and distribution companies, NEES and EUA, for a total of $5.6bn. Two years later it unveiled the $9bn acquisition of Niagra Mohawk.