Dive Brief:
- Iberdrola USA and UIL Holdings have agreed to merge, potentially creating a utility valued at $3 billion and serving 3 million customers.
- The combined company would be one of the largest utilities in the United States and the second largest wind operator in the country.
- Bloomberg reports the new company will have customers in New York, Connecticut, Maine and Massachusetts, and intends to invest almost $7 billion into regulated gas and power projects over the next five years.
Dive Insight:
Iberdrola and UIL's merger would create one of the largest utilities in the United States, but the deal is still subject to approval by UIL shareholders as well as the Connecticut Public Utilities Regulatory Authority, Massachusetts Department of Public Utilities and FERC. The companies said they anticipate the deal closing later this year.
Ignacio Galán, chairman of Iberdrola, called the deal "a major step forward." He also noted the mutual decision by the companies to merge, noting that the proposal "reflects our preference for effecting corporate operations on a friendly basis.”
Iberdrola said the deal would increase its regulated footprint, "adding low risk and predictable cash flows."
The transaction, which has been approved and recommended to UIL shareholders by UIL’s board of directors, will be made through an exchange of Iberdrola USA shares for UIL stock and an additional cash payment to UIL shareholders of $597 million.
Iberdrola is also reportedly excited to take advantage of UIL's gas operations. The company's expertise “allows us to become part of the nice cake which is the shale gas development in the U.S., so that’s attractive,” Iberdrola Chief Financial Officer Jose Sainz said on a conference call, according to Bloomberg. “I think we are going to cut a piece of that cake.”
