St. John's-based Fortis Inc. has a friendly deal to buy U.S. electric transmission company ITC for US $11.3 billion, which will operate as a stand-alone company within a Canadian group that operates various electric, natural gas and other utilities on both sides of the border.
The deal involves a combination of cash and shares in Fortis, the parent company of Newfoundland Power, Maritime Electric and other energy companies.
Although Fortis has a low public profile, it has extensive operations across North America and a stock market value of about C$11.6 billion based on Monday's closing stock price in Toronto.
About 27 per cent of Fortis total shares (TSX:FTS) will be owned by ITC shareholders if the deal is completed as proposed. The deal requires various regulatory approvals as well as approvals from shareholders of both companies.
"Fortis has grown its business through strategic acquisitions that have contributed to strong organic growth over the past decade . . . ITC not only further strengthens and diversifies our business, but it also accelerates our growth," Fortis president and CEO Barry Perry said in a statement joint statement issued by the two companies.
Fortis is offering US$22.57 in cash — about US$6.9 billion in total — and about three-quarters of a Fortis share for each ITC share. Fortis will also assume about US$4.4 billion of debt owed by ITC.
"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..
Fortis will add ITC's high-voltage transmission lines in seven states to holdings in several Canadian provinces, the United States and elsewhere.
Its Canadian holdings include FortisBC, which provides natural gas, electricity, propane and alternative energy solutions to approximately 1.1 million customers in more than 135 communities in British Columbia. FortisAlberta has 530,000 customers, FortisOntario has 64,000.
In the United States, 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.