Dive Summary:
- A month after withdrawing its merger application in Texas, Entergy Corp. and ITC Holdings Corp. face uncertainty about its merger plans.
- The merger would give ITC ownership of Entergy's transmission assets in exchange for a majority share of ITC stock worth more than $2 billion. After gaining the Federal Energy Regulatory Commission's (FERC) approval in June, the companies disagreed with the conditions set by the Texas Public Utility Commission and withdrew its filing there.
- "We have not yet re-filed and have not made a final decision as to our path forward in Texas. We have a merger agreement in place with ITC and are evaluating our next steps under that agreement," Entergy spokesman Mike Burns explained.
- Commissioners in Louisiana, Arkansas and Mississippi have deferred decisions about the merger while management at both companies are growing silent. "We perceive management's growing silence as indicative of deal risk. Even if the deal goes forward, the economics will likely be substantially eroded for Entergy,” said Dumoulin-Smith of Swiss investment bank UBS AG.
From the article:
"We continue to expect either the deal will be abandoned, or look for a renegotiated agreement between (Entergy and ITC) over the prospective sharing in any potential deal economics, particularly given the significant potential reductions to authorized rates should the transaction be approved," Dumoulin-Smith wrote.