Fortis to buy Vermont's largest electric utility in $700m deal
Fortis (TSE:FTS), the largest investor-owned utility in Canada, said on Monday that it is buying Central Vermont Public Service (NYSE:CV) (CVPS), Vermont's largest electric utility, in a $700 million deal.
Fortis will pay CVPS shareholders $35.10 per share, representing a 44% premium over CVPS' closing price of $24.32 on Friday.
The $700 million deal, which saw Fortis beat out several bidders in a confidential sales process, includes the assumption of approximately US$230 million of debt.
The acquisition is expected to add to Fortis' earnings in the first full year of ownership, it said.
St. John's-based Fortis, with assets of $13 billion and fiscal 2010 revenue totalling $3.7 billion, has regulated utility companies operating in five provinces: British Columbia, Alberta, Ontario, Prince Edward Island and Newfoundland, as well as three Caribbean countries. The company serves about 2.1 million gas and electricity customers.
CVPS, which employs about 520 people, serves nearly 160,000 customers in 163 cities and towns across Vermont.
"CVPS is a well-run utility whose operations and operating philosophy are very similar to those of our Canadian regulated utilities," said Fortis president and CEO Stan Marshall.
"The commitment of CVPS to customers, as evidenced by the company's stellar customer service record, is very much aligned with the operating philosophy of Fortis."
Under the deal, CVPS will remain headquartered in Rutland and operate autonomously, with its own board of directors and management team. Fortis said that no job losses are anticipated with the transaction. Larry Reilly is to remain president and CEO of CVPS.
"Fortis brings financial strength to CVPS, giving us strong access to capital markets not available to smaller utilities," Reilly added.
The deal, which is expected to wrap up in six to 12 months, is subject to the approval of CVPS shareholders, as well as the approval of state and U.S. federal regulators.
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