Canadian utility Fortis to buy Arizona-based UNS Energy for $2.5 billion

Fortis Inc., a Canadian utility company, said Wednesday that it plans to buy power provider UNS Energy Corp. for $2.5 billion, expanding its business into Arizona.

Fortis will pay $60.25 per share for UNS Energy. That’s 31 per cent above UNS Energy’s closing price of $45.84. Fortis will also assume $1.8 billion in debt. The companies said Wednesday that they value the deal at $4.3 billion.

UNS Energy, which is headquartered in Tucson, Ariz., provides electricity and natural gas services to more than 650,000 customers in the state through its two subsidiaries, Tucson Electric Power and UniSource Energy Services. Those companies will remain in Tucson, Fortis said.

The deal is expected to close by the end of 2014. Excluding costs related to the acquisition, Fortis expects the deal to boost its earnings per share within the first year.

Fortis serves about 2.4 million customers in Canada, New York and the Caribbean. In June, it paid nearly $1 billion to acquire New York gas and electric utility Central Hudson Gas and Electric Corp.

Shares of UNS Energy jumped $13.56, or 30 per cent, to $59.40 in after-hours trading Wednesday. Fortis shares trade on the Toronto Stock Exchange.