Fortis to buy U.S. electric transmission company ITC in US$11.3-billion deal
Posted February 9, 2016 6:57 am.
Last Updated February 9, 2016 7:24 am.
This article is more than 5 years old.
ST. JOHN’S, N.L. – Fortis Inc. has a friendly US$11.3-billion deal to buy U.S. electric transmission company ITC, the latest acquisition south of the border for the Newfoundland-based utility company.
The deal announced Tuesday includes US$6.9 billion in cash and stock and US$4.4 billion in assumed debt. Shareholders in ITC would have a 27 per cent stake in the combined company.
Although Fortis (TSX:FTS) has a low public profile, it has expanded beyond its base as owner of Newfoundland Power and now owns extensive operations across North America. As of Monday, it had a stock market value of about C$11.6 billion.
“Fortis has grown its business through strategic acquisitions that have contributed to strong organic growth over the past decade,” Fortis president and CEO Barry Perry said in a joint statement issued by the two companies.
“ITC not only further strengthens and diversifies our business, but it also accelerates our growth.”
Fortis is offering US$22.57 in cash and 0.7520 of a Fortis share for each ITC share — totalling about 33 per cent more than what ITC’s shares were worth before it announced on Nov. 30 that it was reviewing its strategic alternatives.
“From the very beginning of ITC, we have been focused on creating meaningful value for all stakeholders, including customers, investors and employees, by becoming the leading electric transmission company in the U.S.,” said ITC chairman Joseph Welch, who is also the company’s president and CEO.
Under the deal, Fortis adds ITC’s high-voltage transmission lines in seven states to its holdings in several Canadian provinces, the United States and the Turks and Caicos Islands.
Its Canadian holdings include FortisBC, which provides power including natural gas, electricity, propane and alternative energy to approximately 1.1 million customers in more than 135 communities in British Columbia. FortisAlberta has 530,000 customers, FortisOntario has 64,000.
The St. John’s-based company, which can trace its roots to the formation of the St. John’s Electronic Company in 1885, also owns Newfoundland Power and Maritime Electric in Atlantic Canada.
In the U.S., Fortis owns Arizona-based UNS Energy with 658,000 electricity and gas customers and the Central Hudson transmission and distribution company in New York state. It also has a 60 per cent interest in a company that provides electricity on Grand Cayman Island in the Caribbean.
