* Deal for $6.9 bln in cash and stock
* Deal for $45 per ITC share, a 14 pct premium
* Fortis to also assume $4.4 bln of ITC's debt
* Fortis to sell 19.9 pct of ITC to investor
(Adds details)
Feb 9 (Reuters) - Canadian utility Fortis Inc FTS.TO said
it would buy U.S. power transmission company ITC Holdings Corp
ITC.N for $6.9 billion - its biggest deal ever - to boost its
exposure to regulated power markets, which have stable power
prices.
Falling electricity demand due to increased energy
efficiency has spurred a spate of mergers in the United States,
with utilities looking to cut their exposure to volatile power
prices in unregulated markets.
ITC shareholders will get $45 per share - $22.57 in cash and
0.7520 Fortis shares for each share they hold - a 14 percent
premium to the stock's closing price on Monday.
ITC's transmission lines, which carry electricity from power
plants to cities, are regulated by the Federal Energy Regulatory
Commission (FERC). These lines tend to be more profitable for
utilities than state-regulated distribution lines within cities.
The company, which said in November that it was exploring
strategic options, owns and operates 15,600 miles (25,000 km) of
transmission lines and facilities in Michigan, Iowa, Minnesota,
Illinois, Missouri, Kansas and Oklahoma.
Fortis, whose regulated utilities serve more than three
million customers in Canada, the United States and the
Caribbean, said ITC is expected to account for almost 40 percent
of its consolidated regulated operating earnings for the year
ended Sept. 30.
Fortis said that including ITC's debt of about $4.4 billion,
the deal was worth $11.3 billion, or $44.90 per ITC share, based
on the Canadian dollar-U.S. dollar exchange rate and Fortis's
closing price on Monday.
ITC will become a subsidiary of Fortis and its shareholders
will own about 27 percent of the combined company.
The deal, expected to close in late 2016, requires approval
from FERC, the U.S. Committee on Foreign Investment and the U.S.
Federal Trade Commission.
Fortis said it would fund the deal with a $2 billion debt
offering and by selling up to 19.9 percent of ITC to an
infrastructure-focused investor, which it did not name.
The company, which is based in St. John's, Newfoundland and
Labrador, also owns hydroelectric generation assets in British
Columbia and Belize.
Fortis said it would apply to list its stock on the New York
Stock Exchange.
Goldman Sachs (N:GS) and Scotiabank advised Fortis and provided
committed financing. White & Case LLP and Davies Ward Phillips &
Vineberg LLP were Fortis's legal advisers.
Barclays (L:BARC) and Morgan Stanley (N:MS) advised ITC, along with Simpson
Thacher & Bartlett LLP. Lazard and Jones Day advised ITC's
board.