Dive Brief:
- AVANGRID and PNM Resources on Wednesday announced plans to merge, in a move the companies say will create "one of biggest clean energy companies" in the United States.
- The combined entity would own 10 regulated utilities in six states, and would have renewable operations in 24 states.
- The boards of each company have approved the merger, which includes an all-cash offer for PNM at $50.30/share. The transaction represents a combined $8.3 billion enterprise value.
Dive Insight:
AVANGRID and PNM officials say the merger is a strategic fit that combines their utility assets and clean energy operations in states "with legal and regulatory stability and predictability offering future growth opportunities."
The news comes about a year after reports surfaced of talks between Avangrid and PPL for a potential $67 billion merger.
"This is a friendly transaction, focused on regulated businesses and renewables," AVANGRID Chairman Ignacio Galán said in a statement. Galán is also chairman and CEO of Bilbao, Spain-based Iberdrola Group, which owns AVANGRID.
The purchase represents a 10% premium over PNM's share price at Tuesday's market close, and a 19.3% premium over the average share price during the previous 30 days, said company officials.
AVANGRID owns 1,900 MW of renewable energy and has a pipeline of 1,400 MW of renewables assets in New Mexico and Texas. Iberdrola also operates a retail business in Texas. PNM Resources owns approximately 2,811 MW of generation capacity and provides electricity in New Mexico and Texas.
"Our combined companies provide greater opportunities to invest in the infrastructure and new technologies that will help us navigate our transition to clean energy while maintaining our commitments to our local teams and communities," PNM Chairman, President and CEO Patricia Vincent-Collawn said in a statement.
Once completed, the deal is expected to boost the earnings contribution of AVANGRID's regulated operations to more than 80%, which in turn will support the company's growing renewables business over the next decade.
The deal "is a strategic fit and helps us further our growth in both clean energy distribution and transmission, as well as helping to expand our growing leadership position in renewables," AVANGRID CEO Dennis Arriola said in a statement.
As a result of the deal, company officials say PNM shareholders will receive approximately $4.3 billion in cash.
The deal needs to be approved by PNM Resources shareholders, along with the Federal Energy Regulatory Commission and regulators in New Mexico and Texas. The transaction must also receive antitrust clearance under the Hart Scott Rodino Act, and approvals from the Committee on Foreign Investment in the United States, Federal Communications Commission and the Nuclear Regulatory Commission.
The companies say it will take about a year to get all necessary regulatory approvals.
