First on BNN: Hydro One CEO says 'market is open for business,' sees more M&A opportunities in U.S.
The CEO of Hydro One (H.TO) has led the utility into its first expansion outside the province. And Mayo Schmidt says the Ontario government, its biggest shareholder, was actually the catalyst that allowed the company to pursue its takeover of Avista.
“The way I would approach this is the province was the catalyst to open up the opportunity for Hydro One to be a commercial organization – to pursue its commercial objectives,” Schmidt told BNN in an interview Thursday. “The real possibility was opened up here when [the province] commercialized Hydro One through the IPO in 2015.”
“We pursued this entirely independently of the province,” he added. “The province, would be, of course as our largest shareholder, aware because they had the opportunity to participate – but they only did so as a shareholder, and not an insider, and not as a manager of the business.”
Schmidt said Avista wasn’t hesitant to get involved with Hydro One, despite the province being its biggest shareholder.
“When they looked at the governance agreement they got comfortable right away and said: ‘this is a commercial organization that’s going to pursue its commercial objectives in the interest of customers and shareholders and by doing so it won’t be encumbered by any other outside interference,’” Schmidt said.
“And I’ve got to say the province has been remarkably disciplined in following the governance agreement.”
Even with the ‘Buy America’ mandate in the United States, Schmidt said he sees more M&A opportunity south of the border.
“I think the market is open for business,” he said. “We certainly want to get through the process on this one first. But having said that, the Pacific Northwest is an area where there’s a collection of different utilities.”
But not everyone is excited about Hydro One’s M&A ambitions.
Ontario NDP energy critic Peter Tabuns said the move to create a "huge multinational utility" would mean less control over the province's electricity system and more financial risk for Ontarians.
"It also raises real concerns about job security for Ontarians," Tabuns said in a statement. "It's clear that the new Hydro One's first responsibility is to its international shareholders, not to the people of Ontario.
It was announced Wednesday that Hydro One would expand to the U.S. market with its purchase of Washington-based Avista for $4.3 billion. With debt included, the deal is valued at $6.7 billion. Shares of Hydro One were down Thursday on the news.
-- With files from The Canadian Press