Entergy to spin off transmission business to ITC
by Associated Press
Published: December 5,2011
Entergy, based in New Orleans, said Monday that it will receive about $1.78 billion in cash, and its stockholders will receive shares of a new company created by the combination of Novi, Mich.-based ITC and the Entergy business. Entergy shareholders will have a 50.1 percent stake in the new company.
The deal is expected to close in 2013.
ITC shares climbed 4.4 percent, or $3.22 to $77 in premarket trading.
The combined company will have a presence in 12 states, including Michigan, Iowa, Louisiana, Mississippi, Alabama and Texas, and it will focus solely on transmitting power, not generating it or delivering it to homes or businesses. It will become one of the largest electrical transmission companies in the United States, with more than 30,000 miles of transmission lines, according to a statement from the companies.
The deal will “significantly enhance” ITC’s operations scale and financial resources and help the company deliver sustainable, long-term growth, Chairman and CEO Joseph L. Welch said in a statement.
Entergy’s electric transmission business consists of about 15,700 miles of transmission lines. Entergy will use most of the cash from the deal to retire debt tied to that business.
ITC also said Monday that it expects 2012 earnings to range between $3.90 and $4.05 per share, excluding expenses tied to the Entergy deal. Analysts surveyed by FactSet expected, on average, earnings of $4.03 per share.
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