The $60.25 per share that Fortis is offering for UNS is a premium of 31.4 percent on UNS's Wednesday close of $45.84 on the New York Stock Exchange. The stock was up 30 percent at $59.40 in after-market trading.

The deal, which still needs regulatory and shareholder approval, will also see Fortis take on about $1.8 billion of UNS debt. It is expected to close by the end of 2014.

UNS operates electric and gas systems that serve residential and commercial customers in southwestern United States, a region that is experiencing above-average economic growth, Fortis said.

"UNS is a well-run utility with an experienced management team," Fortis Chief Executive Stanley Marshall said on a conference call with investors. "The acquisition is expected to be accretive to EPS the first year of closing, including one-time acquisition-related expenses."

Marshall noted that the deal also adds to Fortis's geographical diversity, with no more than a third of total assets being in any single jurisdiction.

Newfoundland-based Fortis is one of Canada's largest gas and electric distribution utilities, serving more than 2.4 million customers across the country, as well as in New York State and the Caribbean.

With the acquisition of UNS, Fortis's total assets will increase by 33.5 percent to $23.5 billion, the company said.