Fortis to buy Vermont power company for $470M
Monday, May 30, 2011
The Canadian utility Fortis Inc. said on Monday that it will purchase electricity distributor Central Vermont Public Service Corp. for about $470 million to get a foothold in the U.S. energy market.
Fortis will pay $35.10 per share in cash for CVPS. That represents a premium of $10.78, or around 44 percent, to the closing price of CVPS shares on Friday. Fortis will also assume the utility’s debt of $230 million.
CVPS shareholders and regulatory agencies still have to approve the deal, which should happen in six to 12 months, Fortis said.
Fortis said it expects to grow in the U.S. and the purchase would add to earnings within the first year.
“The acquisition of CVPS represents the initial entry by Fortis into the U.S. regulated electric utility marketplace,” said Stan Marshall, president and chief executive officer of Fortis. “CVPS is a well-run utility whose operations are very similar to those of our Canadian regulated utilities.”
CVPS provides electricity to two-thirds of the cities and towns in Vermont. It will keep its headquarters in Rutland and act as an autonomous business following the acquisition, Fortis said.
Fortis provides gas and electricity to roughly 2.1 million customers in Canada. It said it is that country’s largest investor-owned distribution utility and had total revenue in the last fiscal year of about $3.7 billion.
The Newfoundland-based company said it will have $13.9 billion in assets when the deal is complete. That represents a 7 percent increase.
It will also divide its business into electric and gas utility operations, which will make up 55 percent and 37 percent of the company, respectively, with regulated assets accounting for 85 percent of the total, Fortis said. These holdings include utilities in five Canadian provinces and three Caribbean countries.