ITC Holdings Stock Spikes On M&A Rumor

• Shares of ITC Holdings Corp. ITC gained more than 10 percent by Monday afternoon but are still lower by nearly 8 percent year-to-date.
• Bloomberg reported that ITC Holdings is evaluating strategic alternatives, including a potential sale of itself.
• The utility space remains ripe for M&A activity as the larger players have been active in acquiring companies with growth prospects following a slowdown of electricity sales.

ITC Holdings is an independent electricity transmission company that operates, maintains, and invests in transmission infrastructure. According to a Bloomberg report, the company is considering strategic alternatives, including a potential sale of itself.

Bloomberg pointed out that nearly 30 utility M&A deals have been announced this year within Canada and the United States. Some of the larger names in the space, including Duke Energy Corp DUK and Southern Co SO have been active in acquiring smaller peers that show growth prospects to counter a slowdown in electricity sales.

One of the largest deals in the space consists of Southern's acquisition of AGL Resources for around $8 billion. By mid-Monday afternoon, ITC's market cap was around $5.1 billion.

Bloomberg continued that ITC is the only public company that specializes solely in high-voltage power lines. This is particularly attractive to some of the larger players as the power lines are regulated by the Federal Energy Regulatory Commission, which typically allow companies to earn higher profits versus limitations imposed by state regulators.

ITC has the highest return on equity among all U.S. utility owners, the Bloomberg reported added. Nevertheless, the publication noted that the company is at an early stage in its evaluations and a sale of the company isn't a guaranteed outcome.