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Central Vermont Public Service receives hostile bid from Gaz Metro

Published: 21:18 23 Jun 2011 BST

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Central Vermont Public Service Corp (NYSE:CV) received on Thursday an unsolicited takeover offer from Gaz Metro, the parent company of Vermont-based Green Mountain Power, rivalling a previous bid from Fortis (TSE:FTS), the largest investor-owned utility in Canada.

The hostile $35.25 per share bid from Gaz Metro comes one month after Fortis (TSE:FTS) announced its plans to buy the electric utility, Vermont's largest, in a $700 million, or $35.10 per share, deal.

At the end of May, Fortis' offer represented a 44% premium over Central Vermont's share price at the time.

In addition to Gaz Metro's $35.25 per share, CVPS shareholders will have the right to receive regular quarterly dividends until the deal closes.

Quebec-based natural gas distributor Gaz Metro also said it will assume about $230 million of Central Vermont's debt, while the deal is expected to offer $144 million in savings to Central Vermont and Green Mountain Power customers over the first ten years through future rates, as a result of natural synergies through consolidation.

CVPS, which employs about 520 people, serves nearly 160,000 customers in 163 cities and towns across Vermont, while Gaz Metro's Green Mountain serves more than 96,000 customers in the region.

Gaz Metro said it also plans to establish a public trust with $1.0 million in annual income to benefit low-income and elderly customers.

"We recognize and honor CVPS' longstanding community involvement in the Rutland region and are eager to strengthen those roots," said Green Mountain Power president and CEO, Mary Powell.

Based in Rutland, Central Vermont's stock on the New York Stock Exchange jumped 3.52% to $35.62 per share as of 3:51 pm EDT on Thursday - above the new offer price, suggesting Fortis may respond with a higher bid.

CVPS confirmed in a statement that it had received the unsolicited offer, and is considering it.

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