Fortis to buy U.S. electric transmission company ITC for US$11.3 billion
St. John's-based utility takes big step south of the border, picking up the largest independent U.S. transmission company
ST. JOHN’S, N.L.—Fortis Inc. has a friendly US$11.3-billion deal to buy U.S. electric transmission company ITC, 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 US$6.9 billion cash, US$4.4 billion in assumed debt and a 27 per cent stake in Fortis, which is based in St. John’s, N.L.
Although Fortis 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… 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 and 0.7520 of a Fortis share for each ITC share—totalling about 33 per cent more than 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.
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. It also owns Newfoundland Power and Maritime Electric in Atlantic Canada.
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.