Fortis US$11.3B deal should be closed in late 2016
On Tuesday, Canadian-based utility company Fortis Inc. announced a friendly US$11.3-billion deal to buy ITC, the largest independent transmission utility in the United States.
Upon completion of the deal, which has been approved by the boards of directors of both companies, Fortis will be one of the top 15 North American public utilities. ITC will continue to be run out of the company’s current headquarters in Novi, Michigan and Fortis says it will retain all of ITC’s employees.
Currently, ITC owns and operates high-voltage transmission facilities in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma.
Barry Perry, President and CEO of Fortis says “Fortis has grown its business through strategic acquisitions that have contributed to strong organic growth over the past decade”. Perry adds “The acquisition of ITC – a premier pure-play transmission utility – is a continuation of this growth strategy. ITC not only further strengthens and diversifies our business, but it also accelerates our growth.”
Under the terms of the acquisition ITC shareholders will receive approximately US$6.9 billion in Fortis common shares and cash at closing. Fortis will assume approximately US$4.4 billion of consolidated ITC indebtedness.
Upon completion of the deal, ITC will become a subsidiary of Fortis and approximately 27% of the common shares of Fortis will be held by ITC shareholders. ITC will continue as a stand-alone transmission company.
ITC says under the agreement, it will benefit from a broader platform which will support the company’s mission to modernize US electrical infrastructure.
“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.,” says Joseph L. Welch, Chairman, President and CEO of ITC.
Welch says the deal accomplishes the company’s objectives by allow ITC to pursue its long-term strategy of investing in transmission opportunities, improving reliability and expanding access to power markets and allow new generating to interconnect to transmission systems which may lower the overall cost of delivered energy.
“I am forever grateful for the hard work of the ITC employees in building this great company and look forward to a bright future of continued operational excellence supported,” says Mr. Welch.
In addition to the necessary state approvals, the deal is subject to shareholder approvals as well as federal approvals including, among others, those of the Federal Energy Regulatory Commission (“FERC”), the Committee on Foreign Investment in the United States, and the United States Federal Trade Commission/Department of Justice.
The deal is expected to close in late 2016 and in connection with the acquisition, Fortis will apply to list its common shares on the NYSE.