Iberdrola: Avangrid Accepts Takeover Bid After a Modest Increase in the Price Proposed

We confirm our EUR 12 fair value estimate for no-moat Iberdrola after it raised its takeover price for the 18.4% of Avangrid shares it does not own by 4.4% from $34.25 to $35.75 per share, very close to our $36 assumption. The proposal was accepted by Avangrid's board of directors on May 17. The deal will result in cash outlays of $2.55 billion or EUR 2.35 billion for Iberdrola at the current exchange rate. We calculate that it will be EPS-accretive by 2%. We see Iberdrola shares as fairly valued.