Fortis will acquire all outstanding common shares of Central Vermont Public Service for an aggregate purchase price of approximately US$700 million, including the assumption of approximately US$230 million of debt. The all-cash transaction will provide CVPS shareholders $35.10 per share, a 44 percent premium over the CVPS common share closing price of $24.32 on Friday, May 27.

"CVPS is a well-run utility whose operations and operating philosophy are very similar to those of our Canadian regulated utilities," said Stan Marshall, president and chief executive officer, Fortis Inc. "The commitment of CVPS to customers, as evidenced by the company's stellar customer service record, is very much aligned with the operating philosophy of Fortis -- to provide our customers with safe, reliable service in the most cost-efficient and environmentally responsible manner possible," he explained.

"At Fortis, we believe that to serve customers well, our operating companies need to stay close to our customers," said Marshall. "CVPS will remain autonomous in the Fortis model, with its own board of directors and its own local management team. CVPS will remain headquartered in Rutland with Larry Reilly as president and CEO," he said. "There are no job losses anticipated with this transaction."

The Fortis group of companies has regulated utility companies operating in five provinces of Canada -- British Columbia, Alberta, Ontario, Prince Edward Island and Newfoundland -- and three Caribbean countries. Marshall explained that there are almost 7,000 employees throughout the Fortis Group of Companies; however Fortis' Head Office, headquartered in St. John's, Newfoundland, has less than 20 employees. "We are a very decentralized organization," he said. Reilly said Fortis was selected from several bidders following a confidential sales process directed by the CVPS Board.

The acquisition is expected to be accretive to earnings per common share of Fortis in the first full year of ownership.

Under the agreement, CVPS customers and employees will receive the following direct benefits:

• Approximately $21 million will be provided by Fortis for the benefit of CVPS customers, in a manner to be determined through the regulatory approval process;
• CVPS will continue to be managed from the company's headquarters and maintain its substantial civic presence in Rutland and across Vermont; and
• CVPS and its customers will benefit from the sharing of best practices among the Fortis Group of Companies in the areas of safety, reliability, efficiency and customer service.

The transaction is subject to the approval of CVPS shareholders, state and U.S. federal regulators and other customary conditions, and is expected to be completed in approximately six to 12 months.

Lazard advised CVPS. Legal advisors to Fortis were White & Case LLC and Kenlan Schwiebert Facey & Goss P.C. CVPS was represented by Loeb & Loeb LLP and Sidley Austin LLP.