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Fortis will buy CH Energy

by Lou Whiteman  |  Published February 21, 2012 at 10:43 AM
Fortis_227x128.gifCanadian utility Fortis Inc. on Tuesday, Feb. 21 said it would buy CH Energy Group Inc. of New York for $1.5 billion in cash and assumed debt, following through on the company's plan to expand its operations in the U.S.

Terms of the deal call for Fortis to pay $65 per share for Poughkeepsie-based CH, a premium of 10.5% over the target's Friday close. St. John's, N.F.-based Fortis, the largest publicly-traded utility in Canada, will also assume about $500 million in debt as part of the deal.

CH is the parent of Central Hudson Gas & Electric Corp., which serves about 300,000 electric and 75,000 natural gas customers in eight New York counties and delivers natural gas and electricity over a 2,600 square mile service territory. Fortis, which has more than 2 million customers in Canada, said late last year it was seeking to expand into the U.S. in hopes of building a business that would match its Canadian operation within 10 years.

Fortis CEO H. Stanley Marshall in a statement called the purchase "a strong first step in the regulated U.S. electric utility marketplace." He said Central Hudson would remain a standalone utility headquartered in Poughkeepsie, and will honor its existing collective bargaining agreements.

Foris last year lost out to its Canadian rival Gaz Métropolitain LP in a bid to acquire Central Vermont Public Service Corp. Fortis has had better luck in Canada, buying Aquila Networks Canada (British Columbia) Ltd. and Aquila Networks Canada (Alberta) Ltd. in 2004 for a combined $1.5 billion, and adding Terasen in 2007 for $3.7 billion.

The latest deal is subject to CH shareholder approval, as well as approval by the New York State Public Service Commission, the Federal Energy Regulatory Commission and antitrust authorities. CH Energy chairman and CEO Steven V. Lant in a statement said that the deal delivers "compelling value to our shareholders" and, by coupling Central Hudson to a larger company, could help to offset or defer future rate increases.

CH Energy was advised by Lazard and Wachtell, Lipton, Rosen & Katz. A White & Case LLP team led by John M. Reiss, Matthew J. Kautz and Earle H. O'Donnell joined with Mark Hickson of Bank of America Merrill Lynch to advise Fortis. --  Claire Poole contributed to this report

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Tags: Central Hudson Gas & Electric Corp. | CH Energy Group Inc. | Fortis Inc. | M&A
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Lou Whiteman

Senior writer, aerospace, airlines, defense & conglomerates

Lou Whiteman is senior writer covering industrials and transportation, including negotiations between major airlines and the regulatory concerns affecting M&A in the sector. Contact



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