UNS Energy Corp., the parent of Tucson Electric Power Co., has agreed to be acquired by Canada-based utility Fortis Inc. in a deal worth $4.3 billion, the companies said today.
Both of UNS utility subsidiaries, TEP and rural provider UniSource Energy Services, “will remain headquartered in Tucson under local control with current management and staffing levels and no planned changes to existing operations or rates,” the companies said.
The merger agreement — which still requires shareholder and regulatory approval — calls for Fortis, Canada’s largest investor-owned gas and electric distribution utility, to acquire all of the outstanding common stock of UNS Energy for $60.25 per share in cash, plus the assumption of about $1.8 billion in debt.
Prior to the merger announcement, UNS shares closed at $45.85, down 46 cents, in trading on the New York Stock Exchange. Its shares were up nearly 30 percent in after-hours trading. UNS is the only Tucson-based company traded on the Big Board and one of a handful of locally based public companies.
“Joining the Fortis family will provide UNS Energy with new financial strength, helping us maintain safe, reliable and affordable service for our utility customers as we address the capital-intensive challenges facing our industry,” Paul Bonavia, UNS Energy’s chairman and CEO, said in a news release.
The proposed acquisition will be submitted early next year for the approval of UNS Energy shareholders, the company said.
The deal is also subject to the approval of regulators including the Arizona Corporation Commission and the Federal Energy Regulatory Commission, as well as federal antitrust review and other customary closing conditions. UNS expects the transaction will be finalized before the end of 2014.
In 2004, the Corporation Commission rejected a proposed private leveraged buyout of UNS, then known as UniSource Energy Corp., by a group led by Kohlberg Kravis Roberts & Co. That deal was for $25.25 per share, or a total of nearly $3 billion including up to $660 million in new debt.