Fortis Agrees To Buy UNS Energy - Update

(RTTNews) - Canadian electric utility Fortis Inc. (FTS.TO) has agreed to buy Arizona-based power company UNS Energy Corp. (UNS) for $4.3 billion including debt, as it expands itself in the US market.

Fortis has agreed to pay $60.25 a share and will also assume about $1.8 billion in debt. The offer price represents a premium of about 31 percent to UNS Energy's Wednesday closing price of $45.84. Investors of UNS relished the acquisition news, sending its stock surging 30 percent in the after hours trade.

Tucson, Arizona-based UNS Energy provides natural gas and electric services for over 650,000, customers in Arizona. UNS Energy's fiscal 2012 operating revenues were about $1.5 billion.

"These are significant regulated utility assets located in the U.S. South West, a region experiencing above-average economic growth," said Fortis President and Chief Executive Officer Stan Marshall.

Marshall added that the acquisition is consistent with the company's strategy to invest in high-quality regulated Canadian and U.S. utility assets. Fortis expects the deal to be accretive to its earnings in the first full year after closing, excluding acquisition charges.

Fortis expects to close the deal by the end of 2014, however, it is subject to UNS Energy shareholder approval and certain regulatory and government approvals.

Commenting on the deal, UNS Energy CEO Paul Bonavia, said, "Joining the Fortis family will provide UNS Energy with new financial strength, helping us maintain safe, reliable and affordable service for our utility customers as we address the capital-intensive challenges facing our industry."

Fortis said that after completing the acquisition it will inject $200 million into UNS Energy to strengthen its balance sheet and help fund the planned purchase of Unit 3 at the natural gas-fired Gila River Power Plant.

USN closed Wednesday's trading at $45.84, down $0.46 or 0.99%, on the NYSE. The stock, however, surged $13.56 or 29.58% in after-hours trade.

FTS closed Wednesday's regular trading at C$31.19, down C$0.14 or 0.45%, on the Toronto Stock Exchange.