ITC Holdings Corp. Exploring Sale Options; Stock Surges

ITC Holdings Corp. Exploring Sale Options; Stock Surges

The stock price of ITC Holdings, an independent electricity transmission company, surged more than 9% to $36.88 per share. In fact, the company’s shares traded as much as $38.28 per share today.

ITC Holdings benefitted from a report from Bloomberg that it is exploring strategic alternatives including a sale, based on information from people familiar with the situation.

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According to the people, ITC Holdings engaged the services of financial advisers to help find potential buyers. The sources requested anonymity because the process is private.

ITC Holdings could attract buyers

Other sources told Bloomberg that National Grid plc, an electric and gas utility company in the United Kingdom is interested to buy ITC Holdings. Iberdrola SA, a Spanish utility company is also interested to acquire the American electricity transmission company.

The Representatives of ITC Holding, National Grid and Iberdrola declined to comment on the matter.

Praful Mehta, an analyst at Citigroup suggested that ITC Holdings could sell itself for as much as $45 per share, a 37% premium on its 50-day average stock price, and in line with the price of other utility deals.

Mehta said, “Launching a sale process now would make sense. The analyst initiated a Buy rating on the shares of ITC Holdings.

On the other hand, Stacy Nemeroff, a utilities analyst for Bloomberg Intelligence believed that ITC Holdings “can get a lot of interest.” She believed that the company’s potential may include U.S. and Canadian infrastructure funds seeking regulated, contracted cash flow, or European utility owners such as National Grid.

“They’re the only all-transmission company in the U.S. and that model is more common in Europe,” said Nemeroff.

The Federal Energy Regulatory Commission (FERC) regulates the high-voltage power lines of ITC Holding, which has the highest return on equity among the utility companies in the United States. The company operates 15,600 miles of lines in six Midwest states. Customers requested the FERC to reduce the allowed return on equity for the company. A Commission’s chief administrative law judge is expected to decide on the request in the middle of December.

U.S./Canadian utility deals

Some utility companies in Canada and the United States such as Southern Co. and Duke Energy Corp are buying utilities with potential growth amid the weakening of electricity sales. Nearly 30 utility transactions have been announced in both countries this year. The total value of the announced deals was approximately $44 billion based on data compiled by Bloomberg.

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