US subsidiary Avangrid acquires PNM Resources, NM-Tex utility
Iberdrola's U.S subsidiary, Avangrid and New Mexico and Texas utility PNM Resources to combine in strategic merger. The two strategically aligned, premier companies will create a large, diversified national regulated utility and renewable energy platform with approximately $14 billion of rate base, more than 4 million electric and natural gas utility customers and more than 7.4 gigawatts of renewable energy assets.
- Spanish utility's second acquistion abroad in two months
- Bid for PNM Resources takes utility into Texas, New Mexico
By Rodrigo Orihuela and Will Mathis/Bloomberg
Petroleumworld 10 21 2020
Iberdrola SA agreed to buy PNM Resources Inc. for $4.3 billion, pushing deeper into the U.S. power market as the Spanish utility strengthens its position as a global giant in an industry that's being transformed.
The deal -- at $50.30 per PNM share and a 10% premium -- is the company's second in two months after Iberdrola bought Infigen Energy in Australia in September. It continues a strategy by Chief Executive Officer Ignacio Galan to grow beyond the Iberian peninsula and build a business with worldwide reach in power grids and renewables plants.
Galan was among the first in the utility business to wind down coal plants and build renewables, taking advantage of a plunge in the cost of wind turbines and government incentives to slash emissions. That's touched off a flurry of deals to reshape the electricity industry, drawing oil majors including Royal Dutch Shell Plc and Total SA to grab a part of a business once dominated by utilities.
It also reflects increasing focus on the transition to cleaner energy in the U.S., driven by economics favoring wind and solar farms over coal -- despite President Donald Trump's effort to water down environmental rules. In recent months, the renewables-focused company NextEra Energy Inc. became the world's largest utility owner by market value and weighed an offer for power giant Duke Energy Corp .
Galan is seeking to bring Iberdrola into new markets in the most developed economies, firming up routes to build more green power projects in the coming years. He has seen the coronavirus-induced economic downturn as an opportunity to boost spending, enacting a 10 billion euro ($11.9 billion) investment plan.
PNM provides power to about 790,000 homes and businesses in Texas and New Mexico and has 2.8 gigawatts of generation capacity, according to information on its website. Like many U.S. utilities, it's been pushing to retire coal plants and adding renewable energy, moves in step an effort Iberdrola started pursuing almost two decades ago.
Iberdrola posted positive financial results Wednesday with increases in net profit and earnings in the three months to September. The company saw a 52% rise in renewable investment in the first nine months of 2020 and has added 4.6 gigawatts of power capacity in the last 12 months.
The deal to buy PNM is for $50.30 per PNM share, a 10% premium to yesterday's closing price but also a 10% discount to the pre-Covid high earlier this year.
An accord would also offer Iberdrola the chance to further expand beyond the territory of its New York-listed unit Avangrid Inc. , which works in the northeastern U.S. Although the Madrid-based utility, one of the world's leading producers of renewable energy, already operates across North America, its main business is around Avangrid.
PNM will give Iberdrola 10 regulated electricity companies in six states -- New York, Connecticut, Maine, Massachusetts, New Mexico and Texas, according to the company.
Iberdrola's shares are up 19% this year, making it the second largest company in the benchmark Ibex-35 by market capitalization.
PNM has received regulatory approval to more than triple its renewable-power capacity to 2 gigawatts by the end of 2022. It has set a goal to be 100% emissions free by 2040.
The deal requires approval from a PNM shareholders meeting