Hy­dro One signs deal to buy Avista for C$6.7B in cash

The Hamilton Spectator - - BUSINESS - THE CANA­DIAN PRESS

Hy­dro One Ltd. is ac­quir­ing U.S. en­ergy com­pany Avista Corp. for C$6.7 bil­lion in an all-cash deal that would cre­ate one of the largest reg­u­lated util­i­ties in North Amer­ica.

The Toronto-based com­pany said Wednes­day af­ter the close of mar­kets that it will pay C$67 per share in cash for the U.S. firm.

Shares in Avista closed Wednes­day at US$43.33 on the New York Stock Ex­change.

“This trans­ac­tion demon­strates the power and value of the tran­si­tion into an in­vestor-owned util­ity, by al­low­ing for healthy ex­pan­sion into new lines of reg­u­lated util­ity busi­ness and new ju­ris­dic­tions, such as the U.S. Pa­cific North­west which is ex­pe­ri­enc­ing cus­tomer and eco­nomic growth,” Hy­dro One CEO Mayo Sch­midt said in a state­ment.

The com­pa­nies said there will be no job losses as a re­sult of the merger and cus­tomer rates will not be af­fected by any of the costs as­so­ci­ated with the trans­ac­tion.

Un­der the agree­ment, Avista would keep its ex­ist­ing cor­po­rate head­quar­ters in Spokane, Wash., and con­tinue to op­er­ate as a stand­alone util­ity in Wash­ing­ton, Ore­gon, Idaho, Mon­tana and Alaska.

“Through this agree­ment, we have a unique op­por­tu­nity to se­cure a part­ner­ship that al­lows us to con­tinue to de­fine and con­trol, to a sig­nif­i­cant de­gree, fu­ture op­er­a­tions and op­por­tu­ni­ties in a con­sol­i­dat­ing in­dus­try land­scape for the ben­e­fit of our cus­tomers,” Avista chair and CEO Scott Mor­ris said in a state­ment.

“In Hy­dro One, we be­lieve we’ve found a part­ner that al­lows us to pre­serve our iden­tity and our proud legacy, while also pre­par­ing us for the fu­ture.”

The deal was unan­i­mously ap­proved by the boards of both com­pa­nies and is ex­pected to close in the sec­ond half of 2018, sub­ject to Avista share­holder and cer­tain reg­u­la­tory and gov­ern­ment ap­provals.

In Novem­ber 2015, Hy­dro One went pub­lic, rais­ing $1.83 bil­lion in one of the most po­lit­i­cally charged ini­tial pub­lic of­fer­ings in Canada. The par­tial sale of the util­ity was part of the On­tario gov­ern­ment’s plan to raise money to fund tran­sit and in­fra­struc­ture projects.

As the sin­gle largest share­holder in Hy­dro One, the pro­vin­cial gov­ern­ment stands to ben­e­fit from the ac­qui­si­tion, which is poised to reap re­turns be­gin­ning in 2019, pro­vin­cial En­ergy Min­is­ter Glenn Thibeault said.

“It is ex­pected to de­liver clear ben­e­fits for the com­pany’s cus­tomers, em­ploy­ees and share­hold­ers – in­clud­ing the peo­ple of On­tario,” Thibeault said in a state­ment.

Hy­dro One has more than 1.3 mil­lion cus­tomers, $25 bil­lion in as­sets and em­ploys 5,500 peo­ple.

Avista pro­vides elec­tric and nat­u­ral gas ser­vices to 721,000 cus­tomers.

CANA­DIAN PRESS FILE PHOTO

Hy­dro One buys U.S. en­ergy gi­ant Avista.

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