Iberdrola Makes $2.5 Billion Bid to Take Full Ownership of Avangrid — Update
By Pierre Bertrand
Iberdrola said it made an offer to take full ownership in subsidiary Avangrid for about $2.49 billion, in a bid to boost its exposure to the U.S.
The Spanish electric utility said Thursday that it made a nonbinding offer to buy out the remaining 18.4% of Avangrid it doesn't already own for $34.25 a share in cash. The price is a premium of around 10% to the U.S. renewable-energy company's weighted average share price over the past 30 days, Iberdrola said.
Avangrid shares closed at $32.08 on Wednesday, falling 1% since the beginning of 2024. At 1208 GMT, Iberdrola shares traded 1.7% higher at EUR11.00, but were down 7.3% year to date.
"The objective of this transaction is to increase exposure to the networks business in the United States at a key time for Iberdrola, which wants to grow in markets with high credit ratings and in regulated businesses such as networks," the company said.
The decision to bid for the remainder of Avangrid follows the collapse in January of a proposed merger between the U.S. business and peer PNM Resources. The Spanish company last week completed an around $6.2 billion sale of power-generation plants in Mexico.
Avangrid houses Iberdrola's U.S. renewable-energy assets as well as electric and natural-gas utilities. It called off a $4.3 billion merger deal with PNM that the companies reached in 2020. That merger would have created a company with more than 7.4 gigawatts of renewable assets and 4 million electric and natural-gas utility customers.
Connecticut-headquartered Avangrid has $44 billion in assets and operations in 24 U.S. states.
Buying out Avangrid's minority shareholders would lead to a small earnings gain for Iberdrola and reduce the likelihood of large mergers and acquisitions for the Spanish company in the U.S., JPMorgan analysts wrote in a research note. For Avangrid shareholders, the alternative could be facing equity raises or dividend cuts to fund its investment plans, the analysts added.
The deal is subject to negotiation and due diligence, as well as regulatory clearance and approval from Avangrid shareholders, Iberdrola said.
Write to Pierre Bertrand at pierre.bertrand@wsj.com
(END) Dow Jones Newswires
March 07, 2024 07:46 ET (12:46 GMT)
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