ITC Holdings Corp. (ITC) to be Acquired by Canadian Utility Fortis in $11.3B Deal
Shares of ITC Holdings Corp.(ITC) were trading up +3.05 or +7.75 percent to $42.43 in Tuesday’s premarket after news early this morning that the company would be taken over by Canadian utility Fortis Inc. (FRTSF) for $11.3 billion in cash and stock. ITC stock closed at $39.38, up +0.04 or +0.10 percent in Tuesday’s regular trading session.
St. John’s, Newfoundland and Labrador, Canada based Fortis Inc. is a multinational diversified electric utility company with operations in Canada, the United States, the Caribbean and Central America. The company was formed in 1987 when stockholders of the Newfoundland Light & Power Co. voted to create a separate holding company. The company currently owns FortisBC, FortisAlberta Inc., Fortis Ontario, Tucson Electric Power and UniSource Energy Services in Arizona, Central Hudson Gas & Electric in New York, Caribbean Utilities in the Cayman Islands and Belize Electricity Limited in Belize as well as other regional utility companies in Canada.
The terms of the agreement will have Fortis Inc. pay $44.90 per share to ITC shareholders in a combination of cash and stock. ITC stockholders will receive $22.57 per share in cash and 0.7520 shares of Fortis for each share tendered. The price represents a 14 percent premium over ITC stock’s closing price on Monday.
ITC shareholders will receive approximately $6.9 billion in Fortis common shares and cash at the deal’s closing with Fortis assuming about $4.4 billion of ITC consolidated debt. After the acquisition, ITC will become a Fortis subsidiary with approximately 27 percent of Fortis common shares held by ITC shareholders.
Joseph L. Welch, Chairman, President and Chief Executive Officer of ITC stated in the company’s press release that, “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. Fortis is an outstanding company with a proven track record of successfully acquiring and managing U.S. based utilities in a decentralized manner.”
“This transaction accomplishes our objectives by better positioning the company to have a higher level of focus on pursuing our long-term strategy of investing in transmission opportunities to improve reliability, expand access to power markets and allow new generating resources to interconnect to transmission systems and lower the overall cost of delivered energy for customers.”
After the acquisition, Fortis will in the top 15 North American utilities by enterprise value with an estimated enterprise value of $30 billion. Fortis’ 2016 midyear rate base will increase approximately $6.0 billion to $18 billion as a direct result of the takeover.
The deal is expected to close by late 2016 and will be funded by a $2 billion debt offering and by the sale of 19.9 percent of ITC to an unnamed infrastructure focused investor. Fortis said that it would apply for a listing on the New York Stock Exchange as a result of the merger.
The transaction is still subject to the customary regulatory approvals, as well as the Federal Energy Regulatory Committee, the U.S. Federal Trade Commission and the U.S. Committee on Foreign Investment.
Other News about ITC
ITC Files Joint Permit Application with Pennsylvania DEP and U.S. Army Corps of Engineers for Lake Erie Connector Project
The project is a 1000 MW, bi directional, hi voltage direct current submarine merchant transmission line.
ITC Declares Dividend to Shareholders
Company board declares cash dividend of $0.1875 per share payable on March 15th to shareholders of record March 1st.
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