Entergy Corp. and ITC Holdings Corp. have called off plans to spin off Entergy’s electric transmission business and merge it into ITC, because the deal failed to get regulatory approval.
The companies announced the deal in 2011 and have been working since then to get the necessary approvals to complete the deal.
However, Entergy and ITC failed to get Mississippi Public Service Commission’s support earlier this month and they say this prevented the spinoff from moving forward. Mississippi utility regulators unanimously rejected the proposal because the deal could have meant a $300 million rate increase for Mississippi customers over 30 years.
The companies formally terminated the agreement Friday and filed paperwork to withdraw remaining regulatory paperwork.
“While we strongly believe that the transaction would be in the best interest of our customers and all stakeholders, it is clear we don’t have the necessary regulatory support to close the transaction,” Leo Denault, Entergy’s chairman and CEO, said in statement.
The combination would have created one of the largest electrical transmission companies in the United States, with more than 30,000 miles of transmission lines, according to the companies.
It also would have enhanced the scale of ITC’s operations and financial resources. Utility holding company Entergy, based in New Orleans, would have received about $1.78 billion in cash, and its stockholders will receive shares of a new company created by the combined business if the deal had proceeded.
Entergy shares fell 14 cents to $61.08 by midafternoon amid a broader market uptick. Shares of ITC, based in Novi, Mich., increased 25 cents to $93.95, in line with market trends.