Fortis acquires CH Energy
CH Energy Group, Inc., parent company of Central Hudson, announced on Feb. 21 it entered into a definitive merger agreement with Fortis Inc., the largest investor-owned distribution utility in Canada. Under the agreement, Fortis will acquire CH Energy Group for an aggregate purchase price of approximately $1.5 billion, including the assumption of approximately $500 million of debt.
The all-cash transaction will provide $65 per share to common shareholders of CH Energy Group, parent company of Central Hudson Gas & Electric Corporation, an approximate 10.5 percent premium above CH Energy Group”™s closing stock price on February 17 (the last trading day before the announcement). Subject to regulatory approvals and other customary closing conditions, the transaction is expected to close in the first quarter of 2013.
“We are extremely pleased to deliver compelling value to our shareholders and to become the first U.S.-based member of the Fortis federation of utility companies,” said Steven V. Lant, CEO and chairman of the board of CH Energy Group in a prepared release. “We believe this transaction is good for our shareholders, customers and employees alike, reflecting both value for Central Hudson”™s strengths and prospects and helping to ensure its future success.
“Subject to PSC review and approval, there are expected to be customer benefits that could include any or all of the following: offsetting or deferring future rate increases, enhancing the quality of service to customers or making that service more affordable.”
Central Hudson will remain a standalone utility that joins Fortis”™ federation of utility companies. Its headquarters will remain in Poughkeepsie, and its substantial civic presence will continue in the Hudson Valley.
“This is the first step in our strategy to add value for Fortis shareholders by selective acquisitions within the United States of well-run, promising regulated electric and natural gas utilities,” said H. Stanley Marshall, Fortis president/CEO. “CH Energy Group represents for us a strong first step in the regulated U.S. electric utility marketplace. We look forward to welcoming CH Energy Group employees to Fortis and to serving its communities with the same level of dedication we provide to the 2 million gas and electricity customers already served by our existing Canadian utilities.”
Marshall and Lant said all collective bargaining agreements will be honored, and there are no plans by Fortis to reduce the size of the workforce. Customers will not pay for any costs associated with the transaction.
