(Reuters) – Avangrid Inc AGR.N, the U.S. power utility that is controlled by Spain’s Iberdrola SA IBE.MC, is in talks to acquire PNM Resources Inc PNM.N, a peer active in New Mexico and Texas that is worth more than $6 billion, including debt, people familiar with the matter said on Tuesday.
The deal would expand Avangrid’s regulated business beyond its U.S. northeastern footprint. It would also accelerate PNM’s transition to clean energy, given Avangrid’s sizeable renewable energy portfolio.
There is no certainty that the negotiations will lead to a deal, the sources said, requesting anonymity because the matter is confidential. Spokespeople for Avangrid and PNM Resources did not respond to requests for comment.
Efforts among U.S. utilities to consolidate are picking up, amid pressure to slash costs and invest in infrastructure improvements and cleaner forms of electricity generation.
Duke Energy Corp DUK.N rebuffed a takeover approach from NextEra Energy Inc NEE.N last month, a deal which would have created a $200 billion behemoth with operations across the U.S. Southeast and Midwest.
Iberdrola owns a 81.6% stake in Avangrid. The Orange, Connecticut-based company, with a market capitalization of $16.7 billion, is split into two businesses — a regulated utility serving more than 3.3 million customers in New York and New England, and a division which owns and operates renewable power generation assets across the United States.
Avangrid’s experience in clean energy could prove valuable to PNM, as it embarks on a plan it announced in July to phase out coal from its power generation mix by 2031 and achieve emissions-free energy by 2040.
Iberdrola has said it wants to expand its renewable capacity in the United States by about 50 percent over four years as part of its global plan to reduce carbon emissions.
Reporting by Pamela Barbaglia in London and David French in New York; Editing by Sonya Hepinstall