On February 20, 2012, longstanding Thompson Hine client CH Energy Group, Inc. (NYSE: CHG) entered into a merger agreement with Fortis Inc. and its wholly owned U.S. subsidiaries FortisUS Inc. and Cascade Acquisition Sub Inc. Fortis Inc. is listed on the Toronto Stock Exchange (TSE: FTS). CH Energy Group is a New York-based energy delivery systems company. Fortis, the largest investor-owned distribution company in Canada, serves more than 2 million gas and electricity customers and reported fiscal year 2011 revenue of approximately $3.7 billion. The aggregate merger consideration is approximately $1.5 billion. A Thompson Hine team that included lawyers in our corporate and securities, real estate, employee benefits and executive compensation, and tax practice groups, worked together with special merger and acquisition counsel, Wachtell, Lipton, Rosen & Katz, to advise CH Energy Group on the transaction.  

The notable terms of the merger agreement include the payment to CH Energy Group shareholders of all-cash consideration equal to $65 per share of common stock. In addition to providing liquidity and certainty to the shareholders, the $65 per share consideration represents an approximate 9.5 percent premium over the all-time, pre-announcement trading high for shares of CH Energy Group, a multiple of 10.4 times its 2011 EBITDA and 21.9 times its 2011 earnings per share. The company believes that the price premium and those multiples are among the highest such measures for comparable utility company acquisitions in the past 10 years.  

CH Energy Group will be a wholly owned indirect subsidiary of Fortis Inc. The company will maintain its current Poughkeepsie, New York headquarters and operate with a substantial degree of independence under Fortis’ federation-style model for the utilities it owns.  

The merger is conditioned on securing various governmental approvals and the approval of the shareholders of both companies. The parties presently anticipate that the merger will be completed during the first quarter of 2013. CH Energy Group will be able to continue to pay dividends to its shareholders until the merger is completed.