NEW YORK ( TheStreet) -- Entergy ( ETR - Get Report) plans to divest and then merge its electric transmission business with ITC Holdings ( ITC), making ITC one of the largest U.S. electric transmission companies.

Entergy's electric transmission business has 15,700 miles of interconnected transmission lines. In the deal, Entergy will divest this business into a newly created entity called Mid South TransCo, which will then merge into a newly formed subsidiary of ITC.

Entergy's stockholders will receive shares of the new company. Entergy shareholders will have a 50.1% stake in the new company.

The transaction is expected to be completed around the end of 2013.

Entergy anticipates getting about $1.78 billion from the deal.

Shares of both companies were rising in premarket trading Monday. Entergy rose 3.5% to $72.10 and ITC gained 5.7% to $78.01.

-- Written by Alexandra Zendrian

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