The energy industry is consolidating, and one US-based company is teaming up with an investor to the north for mutual growth and success. In Canada, Fortis has a major presence as a gas and electric utilities provider—whether it’s under its own brand name as FortisBC or FortisAlberta, to name a few, or under branches like Newfoundland Power or Maritime Electric. More recently, the company has started expanding its reach beyond Canada with Caribbean Utilities, UNS Energy in Arizona, and Central Hudson in New York. With the recently-announced $11.3 billion planned acquisition ITC Holdings Group, Fortis is tapping into significant potential.
Owning and operating several high-voltage transmission facilities in Michigan, Iowa, Minnesota, Illinois, Kansas and Oklahoma, ITC is a significant pickup for Fortis. With the acquisition of ITC and its assets, Fortis becomes one of the top 15 largest North American public utilities with a valuation of C$42 billion (US$30 billion). In addition, this acquisition keeps Fortis on track for growth with a central path to continue its expansion into larger markets throughout the United States.
Meanwhile there are benefits for ITC as well. The Midwest-based company states that this acquisition is in line with its own objectives of lowering costs for customers and investing in reliability and long-term growth.
"Fortis has grown its business through strategic acquisitions that have contributed to strong organic growth over the past decade—our performance in 2015 is a clear demonstration of the success of this strategy," said Mr. Barry Perry, President and Chief Executive Officer of Fortis, in a statement from the company. "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."
"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 by the Fortis platform," added Joseph L. Welch, ITC Chairman, President and CEO. "We also very much appreciate the longstanding support of our investors who will receive an attractive premium for their investment and will also benefit from the opportunity to participate in the upside of the combination, including future value creation and a growing dividend program."
ITC shareholders will receive US$22.57 in cash plus 0.7520 Fortis shares for every ITC share as a part of the transaction.