Hydro One (TSX:H) and Avista (NYSE:AVA) on Jan. 23 said that they have mutually agreed to terminate their previously announced merger agreement, following recent orders by Washington and Idaho state regulators that denied approval of the merger.
After careful consideration and analysis of the likelihood of achieving a timely reversal of those orders, the companies’ boards of directors individually determined that termination of the merger agreement is the best course of action for the companies and their respective shareholders, the companies said.
As required by the merger agreement, Hydro One will pay Avista a US$103m termination fee as a result of the termination of the merger agreement.
Paul Dobson, acting president and CEO of Hydro One, said in the statement: “Hydro One’s Board, management and employees remain focused on delivering safe and reliable power, providing exceptional customer service and driving shareholder value. On behalf of Hydro One, I would like to thank the teams who have worked tirelessly on the proposed merger throughout this process.”
Scott L. Morris, board chairman and CEO of Avista, said in the statement: “While disappointed with the outcome, I want to express our deepest gratitude to everyone who worked with us on this effort over the past 18 months. Avista is a strong, vibrant, and independent utility, and we look forward to building on our legacy of nearly 130 years by continuing to serve the best interests of our most important stakeholders – our valued customers, loyal employees, the communities we serve, and our shareholders.”
As TransmissionHub reported, the companies on Jan. 15 said that in light of the recent decisions by the Washington Utilities and Transportation Commission and the Idaho Public Utilities Commission to deny Hydro One’s proposed acquisition of Avista, the Oregon Public Utility Commission issued an order suspending indefinitely the current procedural schedule in its merger docket until the companies inform the Oregon commission that they have sought a reversal of the denial decisions through appeal or other means that would provide a justiciable issue for the Oregon commission to address.
The Oregon commission, in its Jan. 14 order, noted that the Washington commission in December 2018 found that the proposed transaction was “not consistent with the public interest” and denied the application. Earlier this month, the Oregon commission said, the Idaho commission found that approval of the merger would violate state law, and denied a request to approve the merger.
The fact of those denials is not the subject of dispute because it is generally known to all parties and can be accurately and readily determined from publications of both state commissions, the Oregon commission said.
“Having taken notice of the regulatory denials in Washington and Idaho, we determine that no justiciable controversy currently exists for us to resolve,” the Oregon commission continued. “The approval of the transaction in Washington and Idaho is necessary for the proposed agreement, and therefore impacts this proceeding directly. Accordingly, the commission will hold this proceeding in abeyance until the applicants inform the commission that they have sought a reversal of these decisions through appeal or other means that would provide a justiciable issue for the commission to address.”
The commission ordered that the current procedural schedule is suspended indefinitely.
As TransmissionHub reported on Jan. 4, according to the Idaho commission’s Jan. 3 order, Avista in July 2017 announced that it had entered into a merger agreement with Hydro One, and in September of that year, jointly applied to the commission for an order approving the proposed merger. The commission noted that if it and other state regulators, as well as regulatory agencies, approve the merger, then Avista would become a wholly owned subsidiary of a Hydro One holding company.