In response to the buyout offer by Northeast Utilities to take over NSTAR an investigation on behalf of investors of NSTAR (NYSE:NST) over possible breaches of fiduciary duties was announced.

The investigation by a law firm concerns whether Northeast Utilities ,NSTAR and its Board breached their fiduciary duties owed to NSTAR (NYSE:NST) investors in connection with the proposed takeover.

On Monday, October 18, 2010, NSTAR (NYSE:NST) and Northeast Utilities (NYSE:NU) announced that both companies Boards of Trustees have unanimously approved a merger agreement, under which NSTAR shareholders would receive 1.312 Northeast Utilities common shares for each NSTAR share that they own in a transaction with a total equity value of $9.5 billion and an enterprise value of $17.5 billion.

Shares of NSTAR (NYSE:NST) traded before the announcement at $39.66 per share and increased as much as $40.83 per share in response to the takeover news.

But NSTAR itself had to admit that the exchange ratio reflects a no premium merger based on the average closing share price of each company for the preceding 20 trading days.

Thus the investigation by the law firm concerns whether a sale process and the offered price are unfair to the shareholders of NSTAR (NYSE:NST).
NSTAR reported over the past four years relatively stable 12 months total revenues ranging from $3.05billion to $3.58billion. Its Net income rose from $208.73million in 2006 to $255.21million in 2009.
The investigation concerns whether the NSTAR Board of Directors undertook an adequate and fair sales process to obtain fair consideration for all shareholders of NSTAR (NYSE:NST) and breached their fiduciary duties to NSTAR (NST) shareholder by failing to adequately shop the Company before entering into the proposed transaction with Northeast Utilities.