July 19 (Reuters) - Canadian electric utility Hydro One Ltd said on Wednesday that it would buy rival Avista Corp for about C$6.7 billion ($5.32 billion) to expand into the U.S. Northwest.
Shares of Avista surged 19 percent to $51.55 in trading after the bell, slightly below the offer price of $53 per share in cash.
The combined entity will have about $25.4 billion in assets and will cater to more than two million retail and industrial customers throughout North America, including Ontario, Washington, Oregon, Idaho, Montana and Alaska.
The deal comes closely on the heels of Berkshire Hathaway Inc's $9 billion offer to buy Oncor Electric Delivery Co, the parent of Texas power transmission company.
Hydro One said it expected the Avista deal to add to its earnings per share in the mid-single digits in the first full year of operation and that its 70 percent to 80 percent targeted dividend payout ratio will remain unchanged.
The transaction will be financed through a combination of medium- and long-term borrowings amounting to about C$3.4 billion together with C$1.4 billion contingent convertible debentures, Hydro One said.
Avista will maintain its existing corporate headquarters in Spokane, Washington and will continue to operate as a standalone utility upon the closing of the deal in the second half of 2018, the two companies said.
Moelis & Company LLC was Hydro One's financial adviser, while Bracewell LLP provided legal counsel. Avista's financial adviser was BofA Merrill Lynch, with Kirkland & Ellis serving as its legal adviser.
$1 = 1.2593 Canadian dollars Reporting by Ahmed Farhatha in Bengaluru; Editing by Anil D'Silva