TORONTO — Opposition politicians may not like it but investors are applauding the rejection of Hydro One’s $6.7-billion takeover of U.S.-based utility Avista Corp.
Shares in the power company controlled by the Ontario government closed at $21.53, up $1.16 or 5.7 per cent, on the Toronto Stock Exchange on Thursday.
On Wednesday, Washington State regulators said they would not allow Ontario’s largest utility to buy Avista for fear the provincial government might meddle in the utility’s operations.
Financial analysts predicted investors would welcome the news because the Avista deal, announced in July 2017, would have eroded earnings per share and weakened Hydro One’s balance sheet.
BMO analyst Ben Pham says investors would prefer that Hydro One focus its attention on its core Ontario business, not expanding outside Canadian borders.
CIBC analyst Robert Catellier raised his 12-month target price by 25 cents and said many shareholders would feel “relieved” that the deal had failed.
Companies mentioned in this article: (TSX:H)
The Canadian Press