Iberdrola's Avangrid scraps flagship $8bn acquisition deal
Merger with US utility PNM that would have created beefed-up green player founders over failure to secure key regulatory approval
Iberdrola-controlled utility Avangrid has scrapped a planned mega-deal designed to dramatically boost the global green power giant’s US footprint after failing to gain regulatory approval.
Avangrid in 2020 offered shareholders of New Mexico-based utility PNM Resources $4.3bn in cash, with assumption of debt adding a further $4bn to the value of an agreed deal.
However, Avangrid jumped every regulatory hurdle except the approval of the New Mexico Public Regulation Commission (PRC) and said today (Tuesday) that with no timeline on its ongoing legal battle to secure this, it had terminated the agreement as a key financial deadline passed on 31 December.
Iberdrola owns 81.5% of Avangrid, which is the third largest clean power capacity owner in the US after NextEra Energy Resources and billionaire Warren Buffett's Berkshire Hathaway Energy.
PNM Resources is the dominant electric utility in New Mexico, which is among the most promising states for new onshore wind development led by the massive 3.5GW SunZia project.
It was reported at the time that members of the regulator’s board had raised concerns over service level issues and an investigation at that stage underway into alleged criminal activity involving an Iberdrola official in its home Spanish market.
The Iberdrola unit said today: “Avangrid intends to continue to focus on its robust growth opportunities, with over $9bn in incremental capital projects organically secured during the pendency of the merger.
“We will focus on delivering over $5bn in capital projects under our New York and Maine multi-year rate plans plus an incremental $2bn in capital projects related to clean energy transmission in New York (CLCPA II), repowering over $5bn of renewable assets under the benefits of the Inflation Reduction Act, and developing new renewable energy projects.”
Avangrid’s projects underway include Vineyard Wind, the first US commercial-scale offshore wind project.
Iberdrola has been looking at other potential US opportunities should the PNM Resources not advance including sale of a minority holding in Avangrid, which is based in Connecticut.
Pat Vincent-Collawn, PNM Resources chairman and CEO, said: "We are greatly disappointed with Avangrid's decision to terminate the merger agreement and its proposed benefits to our customers, communities and shareholders."
PNM Resources said it remains focused on the infrastructure investments necessary to meet customers’ future energy needs.
In December 2021, the utility paid $285m to acquire the Western Spirit wind transmission line that can accommodate 800MW of new project capacity.