It will first be noted that exactly one in three utility mergers in our database has resulted in deal termination. The last deal to fall through was the Northwestern (NWEC(-Babcock debacle, where the issue of non-U.S. ownership ultimately resulted in state-level (Montana) rejection. It should also be recalled that the recently completed Keyspan (KSE)/National Grid (NYSE:NGG) KSE-NGG deal encountered an extremely lengthy and difficult state review in New York. The point here is that the state regulators in utility reviews have very clearly established authority and will therefore be considered the critical regulatory factor(s) in this and future deals.
Unfortunately, we have no frame of reference for the Washington UTC in utility mergers so a timing estimate for the Puget Energy (PSD) - Macquarie Infrastructure Partners merger is, at this point, useless. We will naturally obtain all the relevant information available for this regulatory in the near future and generate a time frame for the review of this transaction. (Note: the UTC was involved in the Verizon (NYSE:VZ)/ MCIP deal last year).
The FERC review is one of the most consistent regulatory review process, state or federal, with decisions made regularly in a four to five month period from application receipt. The FERC has become somewhat of a rubber-stamp regulator, as it has not seriously compromised a deal or deal timing in recent memory. In short, FERC approval can be expected before the end of the second quarter of next year, assuming the application is not withheld.
The HSR and SEC are also essentially non-issue in this case. With the SEC-PUCHA review no longer required in these deals, the SEC timing now comes down a simple matter of the companies waiting for the appropriate point in the state/federal review in which to file the merger proxies.
Additional information with respect to the Washington UTC review process will be obtained and posted shortly.
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