Fortis buying electric transmission company ITC for $6.9B

Fortis said that ITC’s economies of scale and geographical situation positions it to take advantage of the “significant transmission investment opportunity”.

ITC will add to Fortis’s US holdings and make up 39 percent of the regulated earnings of the St. John’s, Newfoundland and Labrador-based company, according to a company presentation. Shareholders in ITC would have a 27 per cent stake in the combined company.

This isn’t Fortis’ first foray into USA utility deals, SNL reports.

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.

Fortis will assume around $4.4 billion of ITC’s debt, the companies noted.

ITC shareholders will get $45 per share – $22.57 in cash and 0.7520 Fortis shares for each share they hold – a 14 per cent premium to the stock’s closing price on Monday. Please see our terms of service for more information.

The company, which said in November that it was exploring strategic options, owns and operates 15,600 miles (25,000 km) of transmission lines and facilities in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma.

In addition to Toronto Stock Exchange, Fortis will apply to list its common shares on the New York Stock Exchange.

Based in Novi, MI, ITC Holdings engages in the transmission of electricity in the U.S.

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. It also has FortisAlberta, which has 530,000 customers, and FortisOntario, which has 64,000 customers.

Fortis has its origins with the formation of the St. John’s Electric Company in 1885 in Canada’s easternmost province a few years after Thomas Edison introduced commercial use of electricity for lighting.

Note to readers: This is a corrected story.

Fortis said it would fund the deal with a $2-billion debt offering and by selling up to 19.9 per cent of ITC to an infrastructure-focused investor, which it did not name.