GIC in $11.3bn ITC deal

Singapore's GIC has agreed to pay $1.2 billion in cash for a 19.9 percent stake in ITC Holdings, which owns and operates high-voltage transmission facilities in several US states, in a bid to help Fortis finance its pending acquisition of the business.

“Financing for the cash portion of the acquisition purchase price will be achieved primarily through this minority investment sale, as well as through the issuance of approximately $2 billion of Fortis debt,” the Toronto-listed utility said in a statement.

“We believe this is an attractive opportunity to partner with Fortis to invest in ITC,” GIC’s head of infrastructure for North America Rhys Evenden said. “Given the high-quality transmission platform ITC offers, the strength of the Fortis management team, and GIC’s long-term approach to infrastructure investing, we look forward to a successful transaction and partnership.”

Fortis announced in February that it had agreed to acquire ITC in a transaction valued at $11.3 billion. Under the terms of the agreement, ITC shareholders will receive $22.57 in cash and 0.7520 Fortis shares per ITC share.

ITC’s facilities, which are located in Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma, serve a combined peak load capacity of more than 26,000MW along 15,600 miles of transmission lines.

While both companies’ boards of directors have approved the proposed transaction, at least six law firms, including that of Louisiana’s former Attorney General Charles Foti, have launched investigations into the fairness of the transaction over concerns the ITC board may not be fulfilling its fiduciary duties to its shareholders.

Infrastructure Investor reached out to these law firms to determine the status of the investigations, but none had responded at press time. Fortis declined to comment.

One source close to the matter, however, said that the investigations are an attempt to launch class action lawsuits and are “complete nonsense and without merit”.

The acquisition, which is subject to ITC and Fortis shareholder approvals as well as regulatory and other customary closing conditions, is expected to close in late 2016.

Following the acquisition, ITC will continue as a standalone transmission company, but will become a subsidiary of Fortis. Fortis in turn will apply to list its common shares on the New York Stock Exchange in connection with the acquisition and will continue to have its shares listed on the Toronto Stock Exchange.

The Canadian utility has pledged to retain all of ITC’s employees and to maintain the company’s headquarters in Novi, Michigan.

Once completed, the acquisition will make Fortis one of the top 15 North American public utilities with an estimated enterprise value of C$42 billion ($33.0 billion; €29.2 billion).