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Fortis, ITC file with FERC for merger approval

and on April 28 filed withFERC for approval of the $11.3 billion mergerthey announced in February.

St. John's,Newfoundland-headquartered Fortis agreed to pay $22.57 per share in cash and 0.7520Fortis share for every ITC share, for a total consideration of $44.90 per share,which represents a 33% premium to ITC's unaffected closing share price on Nov. 27,2015. The deal aggregates $6.9 billion in cash plus Fortis shares for ITC shareholders,and Fortis will also assume $4.4 billion in debt. With the acquisition, Fortis willgain entry into the FERC-regulated transmission market.

Underthe proposed transaction, a Fortis subsidiary and entity called Element AcquisitionSub Inc. will merge with and into ITC, with ITC as the surviving company. Each shareof common stock of ITC will then be canceled. Additionally, an entity describedin the filing as Finn Investment Pte. Ltd., will acquire an indirect 19.9% interest in ITC. Finn is whollyowned by GIC Ventures Pte. Ltd., according to the filing, which is affiliated withan investment company that manages the government of Singapore's foreign reserves.

Underthe terms of the deal, Finn will pay $1 billion in cash for ITC common stock, aswell as $200 million for notes issued by ITC. The cash portion of the overall transactionwill be financed by the issuance of approximately $2 billion in Fortis debt anda combination of equity securities, equity-linked securities, first preference shares,second preference shares and/or hybrid debt-equity securities to be completed byFortis.

Followingconsummation of the transaction, ITC will be an indirect majority-owned subsidiaryof FortisUS, and each of ITC's subsidiaries will be indirectly majority-owned byFortis. Other than ITC, no Fortis subsidiaries or the Fortis parent company willbe affiliated with Finn or its subsidiaries.

In thefiling, the companies assert that the deal is consistent with the public interest,will not adversely affect competition, and does not raise horizontal or verticalmarket concerns. Nor, according to the applicants, will the deal have an adverseeffect on rates or regulation, and it will not result in any cross-subsidizationor encumbrance of utility assets. They noted that all of ITC's transmission assetsare under the functional control of RTOs. The companies requested expedited considerationof the deal, asking the commission for a decision no later than Aug. 26.(EC16-110)