ITC Holdings’ (NYSE:ITC) shareholders, during a special shareholder meeting, voted April 16 to approve the proposed merger of Entergy’s (NYSE:ETR) transmission business into a newly created subsidiary of ITC.
ITC has not disclosed the margin of approval, and did not respond to calls seeking additional details as of press time April 16.
Under terms of the merger agreement announced in December 2011, Entergy will divest its electric transmission business to a newly formed entity, Mid South TransCo, and distribute this newly formed entity to its shareholders in the form of a tax-free spin-off. Mid South TransCo will then merge with and into a newly created merger subsidiary of ITC in an all-stock, reverse Morris trust transaction.
“We believe that the combination of these businesses will result in benefits for all stakeholders,” Joseph Welch, ITC chairman, president and CEO, said in a statement announcing the result of the shareholder vote.
The transaction will add 28,000 MW of load to ITC’s existing 26,000 MW, making it the largest load-serving transmission company in the United States, and add 15,700 miles to its 15,100 miles of transmission lines, making it the second largest transmission company on a miles-served basis, according to Welch.
With the exception of ITC Great Plains, which is a greenfield operating company, ITC Holdings has expanded primarily through acquisitions.
To date, ITC and Entergy, either jointly or individually as appropriate, have made all of the regulatory filings necessary for approval of the transaction. ITC is currently in the process of setting a hearing schedule with the various state regulatory bodies involved and expects to work through the regulatory process this summer, an ITC spokesperson told TransmissionHub previously.
Approvals by the various state utility commissions are in progress, with the Arkansas Public Service Commission (PSC) the latest to weigh in. On April 8, the Arkansas PSC determined that Entergy Arkansas‘ proposed move to the Midwest ISO (MISO) is in the public interest and conditionally granted the utility’s request to transfer functional control of its electric transmission facilities to MISO (Arkansas PSC Docket No. 10-011-U).
The Arkansas PSC’s order is significant for the Arkansas operating company as well as Entergy companies in Mississippi, Texas, Louisiana and New Orleans. Regulators throughout the four-state region in which Entergy utilities operate have conditioned their orders granting the Entergy companies within their jurisdictions permission to move to MISO upon Entergy Arkansas also joining MISO.
Federal regulatory approval is still needed from FERC, and antitrust approval from the U.S. Department of Justice or the Federal Trade Commission. The IRS must approve the tax-free nature of the transaction.
The transaction is targeted to close by the end of the year, subject to receipt of all required regulatory approvals and satisfaction of other closing conditions.