Fortis To Acquire ITC Holdings In $11.3 Bln Deal

(RTTNews) - Transmission utility ITC Holdings Corp. (ITC) announced Tuesday that it has entered into an agreement and plan of merger to be acquired by Canadian electric and gas utility company Fortis Inc. (FTS.TO) in a deal valued at approximately $11.3 billion.

After buying the largest independent pure-play electric transmission company in the United States, Fortis would be among the top North American public utilities with an estimated enterprise value of C$42 billion or $30 billion.

Under the terms of the transaction, ITC shareholders will receive $22.57 in cash and 0.7520 Fortis shares per ITC share. The per share consideration represents a premium of 33 percent over ITC's unaffected closing share price on November 27, 2015.

ITC shareholders will receive approximately $6.9 billion in Fortis common shares and cash at closing of the deal. Fortis will assume approximately $4.4 billion of consolidated ITC indebtedness.

The acquisition would result in approximately 5 percent earnings per common share accretion in the first full year following closing, excluding one-time acquisition-related expenses. Fortis continues to target 6 percent average annual dividend growth through 2020.

The closing of the deal is expected to occur in late 2016. Upon the deal closure, ITC will become a subsidiary of Fortis and its shareholders will hold approximately 27 percent of Fortis common shares.

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

ITC owns and operates high-voltage transmission facilities in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma. The company serves a combined peak load exceeding 26,000 megawatts along approximately 15,600 miles of transmission line.

On a pro forma basis, the consolidated mid year 2016 rate base of Fortis would increase by approximately $6 billion to approximately $18 billion.

Following the acquisition, ITC will continue as a stand-alone transmission company. Fortis intends on retaining all of ITC's employees and maintaining the corporate headquarters in Novi, Michigan.

Separately, Fortis announced that its Board of Directors has accepted the resignation of Paul Bonavia as a director following the company's agreement with ITC.

ITC shares closed Monday's trading at $39.38, up 0.09 percent.