Ontario's electricity distributor Hydro One has entered into an agreement to merge US-based energy company Avista for $5.3bn in cash.
The combined entity is expected to become a major company in regulated electricity and natural gas business in North America, with more than $25.4bn in combined assets.
The transaction will combine two leading regulated utilities with over 230 years of collective operational experience.
Following the completion of the deal, Hydro One and Avista will serve two million retail and industrial customers, holding assets throughout North America including Ontario, Washington, Oregon, Idaho, Montana and Alaska.
Hydro One president and CEO Mayo Schmidt said: “This transaction demonstrates the power and value of the transition into an investor-owned utility, by allowing for healthy expansion into new lines of regulated utility business and new jurisdictions, such as the US Pacific Northwest which is experiencing customer and economic growth.”
After the completion of the transaction, Avista will keep its existing corporate headquarters in Spokane, while the merged entity’s headquarters will be based in Toronto.
Avista will continue its operations as a standalone utility in Washington, Oregon, Idaho, Montana and Alaska.
Schmidt added: “The strength of the combined company enables the accelerated deployment of innovation programs and infrastructure upgrades for the benefit of customers while continuing to deliver on shareholder expectations for consistent, healthy, financial performance.”
The transaction is expected to be completed in the second half of 2018.
It is subject to Avista common shareholder approval and certain regulatory and government approvals and clearances.
Avista activities include production, transmission and distribution of energy as well as other energy-related businesses. Avista Utilities offers electric service to 379,000 customers and natural gas to 342,000 customers.
With over 1.3 million customers, C$25 ($19.8bn) in assets and annual revenues of over C$6.5bn ($5.3bn), Hydro One is a major electricity transmission and distribution provider in Ontario, Canada.
In February last year, Hydro One signed an agreement to acquire Great Lakes Power Transmission business from Brookfield Infrastructure for CAD$222m ($158m).
Image: Transmission lines in the Greater Toronto Area, for which Hydro One is responsible. Photo courtesy of Theonlysilentbob/Wikipedia.