Iberdrola’s Avangrid to buy U.S. firm PNM Resources for $4.3 billion

MADRID (Reuters) – Spanish renewable energy firm Iberdrola IBE.MC announced plans to expand in the United States on Wednesday with a deal to buy utility PNM Resources PNM.N through its U.S. unit Avangrid AGR.N worth $8.3 billion including debt.

Absorbing PNM into Avangrid will create the third-largest renewable energy operator in the United States, with business spanning 24 states, Iberdrola said in a statement.

On Tuesday Reuters reported that the deal was being discussed.

PNM’s board unanimously approved the $4.3 billion offer to its shareholders of $50.3 per share, the filing said. Iberdrola expects the deal to close in 2021 and start boosting financial results from the first year.

Green energy targets and increasing investor interest in protecting the environment have buoyed Iberdrola and other renewables-focused utilities.

The pandemic has also seen U.S. utilities look harder at consolidation to cut costs and spur investment.

Active in New Mexico and Texas, PNM gives Avangrid a route to expand its regulated business beyond the U.S. northeast.

PNM could also benefit from Avangrid’s renewables experience as it works to cut emissions.

Iberdrola said the merged company would have assets worth $40 billion, generate core earnings of around $2.5 billion and net profit of $850 million.

This is Iberdrola’s eighth deal this year as part of a 10 billion euro ($11.85 billion) investment drive in which it has already bought assets in France, Australia and Japan.

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CEO Ignacio Galan said his strategy consisted of: “Friendly transactions, focused on regulated businesses and renewable energy, in countries with good credit ratings and legal and regulatory stability, offering opportunities for future growth”.

Reporting by Isla Binnie; editing by Inti Landauro and Jason Neely

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