Canadian energy company Fortis (TSX:FTS) has entered into an agreement to acquire Arizona-based UNS Energy Corp. (NYSE: UNS) for US$4.3 billion in cash, including the assumption of approximately US$1.8 billion of UNS debt on closing the acquisition.
With this deal Fortis will continue its expansion into U.S. markets serving more than 3,000,000 electricity and gas customers through the acquisition. Fortis already owns New York utility Central Hudson and Griffith Energy Services, which services states in the U.S. Mid-Atlantic region.
Upon closing, Fortis will also inject US$200 million into UNS Energy to help fund the planned purchases of Unit 3 at the natural gas-fired combined cycle Gila River Power Plant and a portion of Unit 1 at the Springerville Generating Station, transactions that will reduce the reliance on coal-fired power by Tucson Electric Power.
"These are significant regulated utility assets located in the U.S. South West, a region experiencing above-average economic growth," said Stan Marshall, President and Chief Executive Officer, Fortis Inc.
"The acquisition of UNS Energy is consistent with our strategy of investing in high-quality regulated Canadian and U.S. utility assets and is expected to be accretive to earnings per common share in the first full year after closing, excluding one-time Acquisition-related costs. The acquisition further mitigates business risk for Fortis by enhancing the geographic diversification of our businesses, resulting in no more than one-third of total assets being located in any one regulatory jurisdiction," Marshall added.
Closing of the acquisition, which is expected to occur by the end of 2014, is subject to receipt of UNS Energy common shareholder approval and certain regulatory and government approvals.