In a surprising but ultimately inevitable outcome that few observers expected at the start, Hydro One Ltd. and Avista Corp. announced they mutually agreed to end their plans to merge. The decision comes after both companies suffered defeats over the past month at the hands of two state commissions, whose approval was required for the deal to be completed.
“After careful consideration and analysis of the likelihood of achieving a timely reversal of those orders, the boards of directors of both companies determined that terminating the merger is the appropriate course of action”, the companies explained on their splash page for information on the now-dead merger.
This was not the result either entity envisioned when the merger was announced 18 months ago (when is it ever?), with Canada-based Hydro One in position to add Washington state-based Avista to its portfolio. The boards at both companies had unanimously approved the deal, with shareholders giving their vote of confidence. Appointments to what would have been the new Avista board were made as well. Given how smoothly things were going, no one doubted that the transaction would be wrapped up, which was originally expected to close at the end of last year.
That is, until Dec. 5, when the Washington Utilities and Transportation Commission (UTC) voted to reject the proposed deal, citing political considerations possibly affecting both companies’ business operations and financial integrity. This came after local controversy north of the border over the actions of Ontario Premier Doug Ford, such as turning over Hydro One’s board, following his election campaign. On Jan. 3, the Idaho Public Utilities Commission joined the UTC in not giving their blessing to the deal. Both utility commissions would go on to decline a requested rehearing of their decisions, leaving Hydro One and Avista with little choice but to end their bid to merge.
With Hydro One having to pay Avista a $103 million termination fee, there will likely be more fallout from the collapse of this transaction.