30 LEXPERT MAGAZINE
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JANUARY/FEBRUARY 2017
1
Fortis's Acquisition
of ITC Holdings
Relationships were the catalyst for Fortis
Inc.'s acquisition of ITC Holdings Corp.
— or at least a relationship. According to
Fortis external counsel Jim Reid of Davies
Ward Phillips & Vineberg LLP, it was a
meeting between Barry Perry, CEO of For-
tis Group, and Joseph Welch, founder and
then CEO of ITC Holdings Corp., which
got the deal rolling with Fortis.
Fortis notes on its website that the com-
pany owns 10 utility operations in 17 loca-
tions in Canada, the United States and the
Caribbean. "is is their third significant
US acquisition," said Reid, "and the culmi-
nation of a longer-term strategy." e lead-
ership team at Fortis asks, "What compa-
nies are out there and what opportunities
might there be?"
In this deal, the Can-Am currency ex-
change rate did amount to quite a bump.
Exchange rates affected the financing
metrics, and Fortis had a period of "pens
down." Said Reid: Fortis "re-evaluated,
got a bit more creative. … If Fortis offered
shares as well as cash," the deal could work.
is would require Fortis to get the approv-
al of its own shareholders and get listed on
the New York Stock Exchange.
e deal needed approval of both sets of
shareholders, as it turned out. To make the
accretion work, they brought in an equity
partner. is involved Fortis running an
auction and thereby bringing in a minority
investor: GIC Private Ltd. Fortis Inc. and
GIC's acquisition of ITC Holdings Corp.
required and received authorization from
nine regulatory authorities, including the
Federal Energy Regulatory Commission.
A significant portion of Fortis's business is
now subject to FERC authority.
Fortis is now among the top 15 North
American regulated investor-owned utili-
ties ranked by enterprise value. "Today is a
special day for Fortis and ITC," Perry told
media. "Our teams have worked tirelessly
over the past year to make this acquisition
happen, and we couldn't be more pleased to
welcome ITC to the Fortis group of utili-
ties. e ITC acquisition is the largest in
the history of Fortis, dramatically increas-
ing our North American footprint. It es-
tablishes significant scale and a new plat-
form in the electric transmission sector."
And it started with that personal rela-
tionship. As Reid explains, a real personal
relationship does not mean there is going
to be a different result for shareholders
if another bidder comes along. What it
does mean, however, is that "when there
are bumps in the road," there is sufficient
goodwill between the two leaders that they
can "challenge their teams to come up with
creative solutions."
On the legal side, success has many par-
ents, and several of the law firms involved
were in the US. On the Canadian side,
Reid gives credit to the in-house lead, Da-
vid Bennett, and Bennett credits his team
members, Paul Fitzpatrick, Regan O'Dea
and Lindsay Hollett. Both Scotiabank and
Goldman were on as financial advisors.
e deal was "transformational," said Reid.
Notwithstanding the exchange-rate chal-
lenge, Reid said the "Canadian capital mar-
kets were very supportive" with Canadian
investors seeming to take a "more patient
view" of the overall and long-term picture.
Key Legal Players
Fortis advisors: Regan O'Dea, Paul Fitz-
patrick, Lindsay Hollett (in-house); White
& Case LLP; Davies Ward Phillips &
Vineberg LLP (M&A/corporate securities,
banking, tax); McInnes Cooper
ITC Holdings advisors: Simpson
acher & Bartlett LLP; Jones Day LLP;
Torys LLP (Canadian M&A, regulatory);
Dykema LLP
Goldman Sachs advisor: Osler, Hoskin
& Harcourt LLP (M&A)
Counsel to financial advisors/lenders:
Skadden, Arps, Slate, Meagher & Flom
LLP; Cravath, Swaine & Moore; Fasken
Martineau DuMoulin LLP (M&A);
Kirkland & Ellis LLP
2
Suncor's
Acquisition of
Canadian Oil Sands
On March 21, 2016, Suncor Energy Inc.
completed its acquisition of Canadian Oil
Sands Ltd. e transaction began as an un-
solicited takeover bid made by Suncor on
October 5, 2015, under which Suncor of-
fered 0.25 of a Suncor share for each COS
share, and was subsequently completed
following the signing of a Support Agree-
ment by Suncor and COS on January 17,
2016, pursuant to which Suncor agreed to
increase its offer price to 0.28 of a Suncor
share for each COS share, with the amend-
ed offer supported by the COS board of
directors. On February 5, 2016, Suncor
acquired approximately 73 per cent of the
COS shares and replaced the COS board
of directors and management team with
Suncor nominees. Suncor extended its of-
fer until February 22, 2016, and acquired
a further 11 per cent of the COS shares on
that date. On March 21, Suncor completed
the transaction by acquiring the remaining
16 per cent of the common shares of COS
that Suncor did not own pursuant to a sub-
sequent acquisition transaction approved
at a meeting of COS shareholders.
As a result of the transaction, Suncor,
which is Canada's largest integrated oil
company, increased its ownership position
in the Syncrude oil sands project from 12
per cent to 48.74 per cent, as COS's sole
material asset was its 36.74-per-cent inter-
est in Syncrude.
Suncor was represented by Blake, Cas-
sels & Graydon LLP with a team that
included Chad Schneider. Schneider had
this to say about the deal: "e things
that made it unique included that it is
relatively rare to see a hostile deal in the
oil patch. at wasn't the way things were
done. Also, this was a share exchange.
en layer on extreme uncertainty in the
oil prices. No one was sure where the bot-
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