POUGHKEEPSIE, New York (AP) -- Fortis Inc. said Tuesday that it has agreed to buy CH Energy Group Inc. in a cash deal worth just under $1 billion, marking the Canadian utility's entry into the regulated U.S. electric and gas distribution market.
CH Energy is the parent company of Central Hudson Gas & Electric Corp., a regulated transmission and distribution utility that serves about 300,000 electric and 75,000 natural gas customers in New York's Mid-Hudson River Valley.
Under the terms of the agreement, Fortis will pay CH Energy Group shareholders $65 per share, representing an 11 percent premium over the utility company's closing share price Friday.
The news sent CH Energy shares up $5.96, or 10.1 percent, to $64.23 in morning trading.
The deal, which is subject to regulatory and CH Energy shareholder approval, is expected to close in the first quarter of 2013. CH Energy will remain a stand-alone company based in Poughkeepsie, New York, and there are no plans for cut jobs, CH Energy said.
Based on CH Energy's 14.9 million outstanding shares, the deal is worth about $967.9 million. The companies valued the deal at about $1.5 billion including the assumption of about $500 million in debt.
Fortis, one of the largest investor-owned utilities in Canada, said it expects the addition of CH Energy to immediately boost its profits, excluding one-time charges related to the acquisition. It pointed to the company's strong balance sheet and credit ratings, along with its diversified customer base.
H. Stanley Marshall, Fortis' president and chief executive, said the acquisition represents a "strong first step" for the company in the regulated U.S. electric utility market. The company's utilities currently serve about 2 million gas and electric customers in Canada.
Central Hudson accounts for about 93 percent of CH Energy's total assets and contributed about 97 percent of its 2011 revenue. CH Energy also owns and operates Central Hudson Enterprises Corp., a non-regulated fuel delivery business with about 56,000 customers in the Mid-Atlantic Region.
As of Dec. 31, CH Energy's assets totaled $1.7 billion. In 2011, its operating revenue totaled just under $1 billion, Fortis said.