Brooklyn-based KeySpan acquired 30-year-old Roy Kay Inc. and itssubsidiaries, Roy Kay Mechanical and Roy Kay Electric, in January2000 for roughly $30 million. According to founder Roy Kay, thecomplex deal involved up-front cash, a series of installmentpayments and a performance-based earn-out.

According to court papers filed by Roy Kay and his son David Kayin May, KeySpan intentionally misled them with regard to the termsof a pending merger between KeySpan and another utility company,Eastern Enterprises. The Kays' lawsuit states KeySpan knew prior topurchasing Roy Kay Inc. that upon completion of the merger Keyspan"would be subject to restrictions on non-energy related business,including general contracting."

Because the Kays claim that 30% of their business traditionallyhas derived from general contracting, they conclude thateliminating that portion of the business would severely hamper thecompany's ability to turn a profit. The remainder of the company'srevenue came from electrical and mechanical work.

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