Fortis to buy UNS Energy in $4.3 billion deal

Canadian utility Fortis reached a deal to buy UNS Energy Corp. for $4.3 billion, including assumption of $1.8 billion of debt. UNS Energy is the parent company of Tucson Electric Power and UniSource Energy Services.

Under the transaction, Fortis will buy the target’s common shares at a cash price of $60.25 apiece. It also plans a $200 million infusion in UNS upon completion to beef up the U.S. firm’s balance sheet and help it bankroll a planned power asset purchase.

Scotiabank has pledged financing for the takeover, the buyer said.

The deal, which has been unanimously backed by the target’s board, has yet to be cleared by its shareholders, with a vote scheduled to take place early next year. It is seen to close by end-2014, pending also other conditions, including Hart-Scott-Rodino clearance, as well as approvals from Arizona Corporation Commission (ACC) and the Federal Energy Regulatory Commission (FERC).

Fortis said that the acquisition, which includes UNS units Tucson Electric Power (TEP) and UniSource Energy Services (UES), would expand its total assets by some 33.5 percent to some $23.5 billion, based on pro forma financial information as at 30 September, with regulated utility assets accounting for 92 percent of the total assets.

According to CEO Stan Marshall, the operations to be acquired represent regulated utility assets located in the U.S. South West, which boasts above-average economic growth.

As part of Fortis, UNS will enjoy an enhanced financial position, helping it maintain its service to clients, CEO Paul Bonavia noted.

Scotiabank, White & Case LLP, Davies Ward Phillips & Vineberg LLP and Snell & Wilmer LLP advised Fortis on the transaction, while UNS was consulted by Lazard Ltd and Baker Botts LLP.

Previous articleDOE releases report on energy storage
Next articleDOE makes new investment in small modular nuclear reactors

No posts to display