Iberdrola's Avangrid offers to buy US utility holding PNM for USD 4.3bn

Spanish utility group Iberdrola SA (BME:IBE) on Wednesday announced that it has made a move to acquire PNM Resources (NYSE:PNM) and merge it with its North American business Avangrid Inc (NYSE:AGR).

The acquisition would create the third-largest renewable energy company in the US, with operations in 24 states, according to the Spanish group.

PNM’s board has approved Avangrid’s offer of USD 4.3 billion (EUR 3.62bn) in cash, or USD 50.3 per share, for the entire share capital, and recommended the transaction to its shareholders, Iberdrola said in the stock market filing.

The merger agreement is subject to PNM shareholders’ approval and regulatory green light at the state and federal level.

PNM runs regulated utilities in New Mexico and Texas, which own about 2.8 GW of generation capacity and serve some 790,000 homes and businesses in the two states. Iberdrola, through majority-owned Avangrid, has 1.9 GW of renewables in New Mexico and Texas, with 1.4 GW more in the pipeline.

The combined company will have 10.9 GW of capacity and assets worth more than USD 40 billion.

“The operation aligns to the strategy we have followed for more than 20 years. Friendly transactions, focused on regulated businesses and renewable energy, in countries with good credit ratings and legal and regulatory stability, offering opportunities for future growth,” said Iberdrola CEO and Avangrid chairman Ignacio Galan.

Iberdrola expects the deal to close in 12 months and start generating positive financial results from the first year.

(USD 1.0 = EUR 0.843)

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