Ontario's electricity distributor Hydro One has scrapped its previously announced $5.3bn acquisition of US-based energy company Avista after failing to secure certain regulatory approvals.
Hydro One said that the mutual decision to terminate the proposed merger was made as the Washington Utilities and Transportation Commission and the Idaho Public Utilities Commission denied approvals for the transaction.
The two companies entered into a merger agreement in July 2017 to create a major player in regulated electricity and natural gas business in North America, with over $25.4bn in combined assets.
The merger would have created an enlarged utility that could serve two million retail and industrial customers while having assets throughout North America, in Ontario, Washington, Oregon, Idaho, Montana and Alaska.
The parties said that their respective boards of directors concluded that the termination of the merger deal is the best course of action for the firms and their shareholders. The decision was taken after they studied and analyzed the possibility of getting a timely reversal of the orders from the Washington and Idaho regulators.
Hydro One acting president and CEO Paul Dobson said: “Hydro One’s Board, management and employees remain focused on delivering safe and reliable power, providing exceptional customer service and driving shareholder value.
“On behalf of Hydro One, I would like to thank the teams who have worked tirelessly on the proposed merger throughout this process.”
Under the terms of the merger agreement, the Canadian company will pay a $103m termination fee to Avista owing to the scrapping of the deal.
Avista board chairman and CEO Scott Morris said: “While disappointed with the outcome, I want to express our deepest gratitude to everyone who worked with us on this effort over the past 18 months.
“Avista is a strong, vibrant, and independent utility, and we look forward to building on our legacy of nearly 130 years by continuing to serve the best interests of our most important stakeholders—our valued customers, loyal employees, the communities we serve, and our shareholders.”