Hydro One on the Acquisition Trail? "The Kathleen" and Her Merry Band of Taxing Liberals Must be Breathing Easier

The trend is there for Canadian public companies acquitting other utilities in the US; however, although Hydro One is public, it is not your average publicly listed company on the Toronto Stock Exchange. It is majority owned by the Ontario government with Ontarians screaming either for "those are the Assets of the people of Ontario!" or "great, it's public now pay me a dividend!".

Either way the culture of bloated pensions and benefits, a cozy club of "sunshine list" earners (greater" than  $100,000/year) and from many reports, rarely a full 8hr work day worked, continues throughout.

The fact an acquisition was made gives the Ontario Liberals another angle of shirking any responsibility as now the government's position will have been diluted and they will argue out of both sides of their mouths to Ontario voters that they have a vastly reduced say or influence as a significant shareholder going forward, so throwing their hands up in the air...yet claiming they did the right thing originally in floating Hydro One as a public entity (thereby pleasing leftist union supporters and reality based capitalists).

As reported, no layoffs are expected at Avista Corp. which for any acquisition is rare, further exemplifying the Ontario Liberals' tentacles and "hire everyone, fire no one" approach are still lingering.  Also, at first pass, it seems there is little in the way of any synergies as the operating territories do not overlap. Conclusion,  Investment Banking 101 would seem this announcement is a head scratcher.

If closed, going forward one of two things are going to happen: the new US subsidiary will either morph into the old Ontario Hydro culture that still permeates the public company today, or Hydro One will actually have to start behaving like a real business and have a more stringent view on compensation and take a hard and close review of the long term pension obligations.

We will see which result wins. I suspect the real winner is the firm raising the US$1.1B in equity and the US$2.6B in debt will be the horse to back.

Another Canadian Utility Nabs U.S. Assets in a $3.4 Billion Deal
https://www.bloomberg.com/news/articles/2017-07-19/hydro-one-reaches-5-3-billion-deal-to-buy-u-s-utility-avista