On December 5, 2011, Entergy Corporation (“Entergy”) and ITC Holdings Corp. (“ITC”) announced that Entergy will divest its transmission business and merge those assets into ITC. Entergy currently owns approximately 15,700 miles of transmission in the states of Arkansas, Louisiana, Mississippi, and Texas. After completion of the merger, ITC will become one of the nation’s largest transmission companies with over 30,000 miles of transmission.
The merger calls for Entergy to divest its transmission assets to the newly-created Mid South TransCo LLC (“Transco”). Transco will then distribute its shares in a tax-free spin-off and then merge with ITC’s newly-created subsidiary in what is known as a “Reverse Morris Trust transaction.” Entergy’s shareholders are expected to receive 50.1 percent of the shares of “pro forma” ITC in exchange for their Transco shares. ITC’s shareholders will own the remaining 49.9 percent of the merged company, and Entergy will issue $1.775 billion in new debt for the merger that ITC eventually will assume.
Although ITC is headquartered in Novi, Michigan, ITC will maintain a regional headquarters in Jackson, Mississippi. The merger is expected to be finalized in 2013, but the transaction must be approved by several states and by the Federal Energy Regulatory Commission and the Securities Exchange Commission.
A link to ITC’s merger announcement is available here.