Canadian utility Fortis to acquire New York rival CH Energy for $1 billion

Canadian utility company Fortis Inc yesterday said that it will acquire CH Energy Group Inc, for about $1 billion in cash, in order to gain entry into the US state-regulated electric and gas distribution business.

Fortis is offering New York-based CH Energy's shareholders $65 per shares, a premium of 10.5 per cent to the company's closing share price on 17 February. Post closing, Fortis will assume $500 million of CH Energy's outstanding debt.

The proposed acquisition will give St. John's, Newfoundland-based Fortis control over a regulated energy transmission and distribution business with 375,000 electric and natural gas customers in eight counties of New York State's Mid-Hudson River Valley.

It would also allow the utility to enter the regulated electric and natural gas distribution markets in the US, which set maximum prices that companies can charge customers.

Founded in 1926, CH Energy's main business is Central Hudson Gas & Electric Corp, a transmission and distribution utility, and a subsidiary Central Hudson Enterprises Corporation, a non-regulated subsidiary comprised primarily of Griffith Energy Services.

Griffith supplies petroleum products and related services to approximately 57,000 customers in the Mid-Atlantic Region.