Fortis eyes U.S. regulated business with CH Energy buy
By Aftab Ahmed and Bhaswati Mukhopadhyay
(Reuters) - Canadian utility Fortis Inc (FTS.TO: Quote) said it will buy New York's CH Energy Group Inc CHG.N for about $1 billion to enter the U.S. state-regulated electric and gas distribution business that assures stable return amid weak power demand.
Fortis, which will also assume $500 million debt, will pay CH Energy shareholders $65 a share, representing a premium of about 11 percent to CH Energy's Friday's close.
CH Energy shares, however, were trading $1.15 above the offer price on Tuesday, indicating some investors were expecting a higher bid for the company.
"We would prefer being long-term holders, because we see an opportunity to take natural gas from Marcellus down to New York," said Mario Gabelli, the billionaire chairman of Gabelli Funds that is CH Energy's largest shareholder with a 10.36 percent stake.
Gabelli was referring to the gas-rich Marcellus shale fields in northeastern United States that has flooded the market with the clean-burning fuel.
"We would prefer to hold on to the stock for the next 2-3 years," he said.
Poughkeepsie, New York-based CH Energy's Central Hudson Gas & Electric is a regulated transmission and distribution utility serving about 300,000 electric and 75,000 natural gas customers in eight counties of New York State's Mid-Hudson River Valley.
Canaccord Genuity analyst Juan Plessis said that as the deal is expected to close within the next 12 months, there was enough time for other parties take a look at CH Energy. Continued...