Canadian utility HydroOne said on Wednesday that it has agreed to buy US energy company Avista for $5.3bn in an all-cash transaction.

Avista shareholders will receive C$67 or $53 in cash for each common share — representing a 22.3 per cent premium over Wednesday’s closing price. Together the two companies will create one of North America’s largest utilities with over $25.4bn in assets.

“This marks a proud moment for Canadian champions as we grow our business into a North American leader,” said Mayo Schmidt, chief executive of Hydro One Limited. “This transaction demonstrates the power and value of the transition into an investor-owned utility, by allowing for healthy expansion into new lines of regulated utility business and new jurisdictions, such as the US Pacific Northwest which is experiencing customer and economic growth.”

The deal, which is subject to regulatory approval, is expected to close in the second half of 2018. The companies currently expect no workforce reductions for either entity as a result of this transaction.

Avista shares were up 19 per cent in extended trading to $51.49.

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