Entergy merging electric transmission business into ITC

Utility holding company Entergy Corp. plans to spin off its electric transmission business and merge it into ITC Holdings Corp., which operates power transmission lines in the Midwest. Entergy, based in New Orleans, announced today 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% stake in the new company. The deal is expected to close in 2013, subject to regulatory and ITC shareholder approval. ITC shares climbed 4.4% on the news, or $3.22 to $77, in pre-market 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 on generating it or delivering it to homes or businesses. It will become one of the largest electric 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 says 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. Read more about the deal at the Entergy website here.