© Reuters. The logo of the Spanish utility company Iberdrola can be seen in front of the headquarters in Madrid
By Isla Binnie and Jose Elías Rodríguez
MADRID (Reuters) – Spain Iberdrola (MC 🙂 announced on Wednesday a deal worth $ 8.3 billion including debt, adding PNM Resources (N 🙂 to its Avangrid (N 🙂 business to become the third largest US operator of renewable energy to accomplish.
The addition of PNM to Avangrid will create an operator in 24 states, Iberdrola said, bringing together companies with a combined market value of over $ 20 billion.
Reuters reported Tuesday that the deal was being discussed.
PNM's board of directors unanimously approved the offer of $ 4.3 billion to its shareholders of $ 50.3 per share. Iberdrola expects the deal to close in 2021 and financial results will improve from year one.
Green energy goals and increasing investor interest in protecting the environment have given Iberdrola and other renewable energy-focused utilities a boost.
The pandemic has also caused U.S. utilities to consider greater consolidation to cut costs and stimulate investment.
PNM operates in New Mexico and Texas and gives Avangrid the opportunity to expand its regulated business beyond the northeastern United States.
PNM could also benefit from Avangrid's experience with renewable energy as it helps reduce emissions. According to Iberdrola, a plan has now been approved to close the coal-fired power plant in San Juan in 2022.
Iberdrola said the combined company would have assets of $ 40 billion, core earnings of around $ 2.5 billion, and net income of $ 850 million.
This is Iberdrola's eighth deal this year as part of a € 10 billion ($ 11.85 billion) investment plan on which more than € 6.6 billion has been spent. It has been shopping for assets in France, Australia and Japan.
CEO Ignacio Galan said his strategy was: "Friendly deals focused on regulated businesses and renewable energy in countries with good credit ratings and legal and regulatory stability that offer opportunities for future growth".
Regardless, Iberdrola reported net income growth of 4.7% after nine months on Wednesday and continued to expect mid to high single-digit growth for 2020.
Iberdrola shares listed in Madrid fell around 0.5% versus a broader market that fell 0.14% to 0753 GMT.
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