New Mexico slams Avangrid's acquisition offer for PNM

State regulators in New Mexico have voted to reject Avangrid Inc’s (NYSE:AGR) proposal to acquire US utilities holding PNM Resources Inc (NYSE:PNM) in an all-cash deal with an enterprise value of USD 8.3 billion.

The plan for the deal was turned down unanimously by the New Mexico Public Regulation Commission (NMPRC) on Wednesday following a recommendation from the PRC hearing examiner that the potential risks to customers outweigh the benefits of the proposal.

In October 2020, Avangrid, the North American clean energy business of Spanish group Iberdrola SA (BME:IBE), offered to acquire and absorb Mexico-based PNM Resources in a deal valuing the company at about USD 4.32 billion in equity terms. The target's shareholders accepted the proposal to get USD 50.3 in cash for each common share held with an overwhelming majority.

Five federal agencies and the Public Utilities Commission of Texas have already greenlit Avangrid’s proposal. NMPRC was the last clearing authority in the permission process.

Both Avangrid and PNM Resources expressed their disappointment with the regulator’s decision and said they will further review and assess the order. “We are evaluating the next steps before us,” Avangrid stated.

PNM Resources has 3.1 GW of diverse power generation capacity and purchased power resources, including renewables, and supplies electricity to roughly 800,000 homes and businesses in New Mexico and Texas. It aims to be emissions-free by 2040.

Iberdrola’s plan to acquire the company aimed to further expand its outreach in the US and create a combined energy company with 10.9 GW of installed capacity that would be the third-largest renewable energy operator in the US.

The Iberdrola unit previously said it anticipated closing the transaction in the second half of 2021.

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