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National Grid sells majority interest in UK gas distribution business

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LNG Industry,

National Grid plc has agreed to sell a 61% equity interest in its UK gas distribution business (NGGD) to a consortium of long-term infrastructure investors, comprising Macquarie Infrastructure and Real Assets (MIRA), Allianz Capital Partners, Hermes Investment Management, CIC Capital Corp., Qatar Investment Authority, Dalmore Capital and Amber Infrastructure Ltd/International Public Partnerships.

The terms of the Transaction imply an enterprise value for NGGD of approximately £13.8 billion. On completion, National Grid will receive a payment of £3.6 billion in cash from the consortium (subject to certain completion adjustments) and will own a 39% minority equity interest in a new holding company for NGGD (GasD HoldCo). National Grid will also receive £1.8 billion from additional debt financing.

National Grid intends to return £4 billion of net proceeds to shareholders through the combination of a special dividend (together with a share consolidation) and share buy-backs. At least 75% of the net proceeds are expected to be returned via a special dividend in 2Q17. Net proceeds are calculated after retaining £0.7 billion of the additional debt financing, in order to maintain the equity value of the company’s 39% interest in NGGD, and after deduction of costs of around £0.5 billion.

Completion of the Transaction is conditional on the receipt of merger clearance from the European Commission. National Grid expects that the transaction will complete on or prior to 31 March 2017.

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