MADRID (Reuters) – Spaniard Iberdrola IBE.MC on Wednesday announced a deal worth $ 8.3 billion including debt, adding PNM Resources PNM.N to his Avangrid AGR.N to create the third American operator of renewable energies.
PNM’s absorption into Avangrid will create an operator with a presence in 24 states, Iberdrola said, and bring together companies with a combined market value of over $ 20 billion.
Reuters reported on Tuesday that the deal was under discussion.
PNM’s board of directors unanimously approved the $ 4.3 billion offer to its shareholders of $ 50.3 per share, according to the filing. Iberdrola expects the deal to be concluded in 2021 and starts improving its financial results in the first year.
Green energy goals and growing investor interest in environmental protection have supported Iberdrola and other utilities focused on renewable energy.
The pandemic has also prompted U.S. utilities to focus more on consolidation to cut costs and boost investment.
Active in New Mexico and Texas, PNM gives Avangrid a path to expand its regulated business beyond the northeastern United States.
PNM could also benefit from Avangrid’s renewable energy experience to reduce emissions. A plan has now been approved to shut down its coal-fired power plant in San Juan in 2022, Iberdrola said.
Iberdrola said the merged company would have assets worth $ 40 billion, generate core profits of around $ 2.5 billion and net profit of $ 850 million.
This is Iberdrola’s eighth deal this year in a € 10 billion ($ 11.85 billion) investment campaign on which it has already spent more than € 6.6 billion . She searched for assets in France, Australia and Japan.
CEO Ignacio Galan said his strategy consisted of: “Friendly transactions, focused on regulated companies and renewables, in countries with good credit ratings and legal and regulatory stability, offering growth opportunities future ”.
Separately on Wednesday, Iberdrola reported nine-month net profit growth of 4.7% and said it still expected mid-to-high single-digit growth in 2020.
Madrid-listed Iberdrola shares were down around 0.5% against a wider market of 0.14% at 07:53 GMT.
Reporting by Isla Binnie; edited by Inti Landauro and Jason Neely