MERRILLVILLE -- NiSource Inc. announced Tuesday it has agreed to sell two of its subsidiaries for $185 million.

Unitil Corp. of Hampton, N.H., has agreed to purchase Northern Utilities Inc.

and Granite State Gas Transmission Inc. from NiSource, according to a news release.

The purchase is expected to be financed by newly issued common stock and debt.

Tom Cuddy, director of corporate communications for Merrillville-based NiSource, said the company viewed the move as a winning situation for all parties.

"This allows us to focus even more closely on our long-term growth plan," Cuddy said.

That growth plan includes commercial development

and expansion of the natural gas pipeline end of the business.

Cuddy said the company also plans to focus on investment driven growth at its regulated utility businesses such as NIPSCO.

NiSource Inc. acquired Northern and Granite in 1999 as part of the company's larger acquisition of Bay State Gas Co., which serves nearly 300,000 residential, commercial and industrial natural

gas customers in Massachusetts.

NiSource is retaining ownership of Bay State.

Cuddy would not comment on whether future plans

for NiSource include additional cost-cutting measures or sales of any of its other

assets.

Brooke Glenn Mullin, natural gas and pipeline distribution analyst for JP Morgan, said even though this is a relatively small transaction for NiSource, the sale of the two subsidiaries is a positive move by management.

"It helps them to focus on the company's regulatory initiatives in other states and allows the company to continue to improve its credit profile," she said.

The company plans to use the proceeds to pay down debt, she said.

The transaction, which is expected to close by the fourth quarter, is subject

to approval by the Maine Public Utilities Commission and the New Hampshire Public Utilities Commission, and review by certain federal agencies.