NOVI – Fortis Inc., Canada’s largest utility owner, has agreed to sell a 19.9 percent stake in ITC Holdings Corp. to Singapore’s sovereign wealth fund GIC Pte for $1.23 billion in cash, in a complicated transaction that allows Fortis to complete its $6.9 billion acquisition of the Michigan utility transmission company.
The transaction, one of the largest ever made by an Asian company in a U.S. utility company, allows Fortis to keep an investment-grade credit rating, according to a statement by the three companies Wednesday reported by Crain’s Detroit. Fortis has done most of the “heavy lifting” on the financing of the deal, according to CEO Barry Perry.
The price meets expectations, enabling Fortis to proceed with a plan to issue $2 billion of debt to complete the ITC takeover, Stacy Nemeroff, an analyst at Bloomberg Intelligence, told Crain’s Detroit.
The Canadian company will hold a shareholder meeting in May to approve the transaction, which requires regulatory approval as well as clearance from ITC shareholders. Fortis plans to issue the $2 billion worth of debt to help finance the deal once the approvals are met, Perry said.
Fortis plans to maintain the ITC brand following the transaction, which Perry said is the best approach in the utility sector.
