Iberdrola Offers to Acquire U.S. Renewables and Wind Subsidiary Avangrid

 

Spain’s Iberdrola, one of the world's biggest energy companies, is proposing to take private its U.S. operating company Avangrid in a deal valued at nearly $2.5 billion. The proposed acquisition comes as both companies are looking to expand their position in renewable energy with Iberdrola already holding over 80 percent of Avangrid.

Avangrid was launched in 2015 when Iberdrola USA, which owned regulated electric and gas utilities in New York and Maine acquired Connecticut-based UIL Holdings Corporation. At the time they said the combination would create a larger, more diversified power and utility company with seven regulated electric and gas utilities as well as a 6.5 GW primarily renewables portfolio, which included the second largest operating wind portfolio in the U.S., and a total pipeline of over 6 GW.

Today the U.S. operation is in 24 states and has two primary lines of business: networks and renewables. Through its networks business, Avangrid owns and operates eight electric and natural gas utilities, serving more than 3.3 million customers in New York and New England while through its renewables business, Avangrid owns and operates a portfolio of renewable energy generation facilities across the United States. 

Last week, they reported that the Bureau of Ocean Energy Management (BOEM) had issued the Final Environmental Impact Statement for its New England Wind lease area. They expect to receive full federal approval in April and for the construction plan in July for the New England Wind lease area which has the potential to provide approximately 2 GW. Avangrid as part of a 50-50 Joint Venture with Copenhagen Infrastructure Partners, is constructing the first large-scale offshore wind project in the United States, Vineyard Wind One, located off the coast of Massachusetts. The project is currently under construction, and on track to achieve full commercial operations in 2024, while the company also pursuing the development of Commonwealth Wind (1200 MW), Park City Wind (804 MW), and Kitty Hawk Wind (3500 MW).

“The objective of this transaction is to increase exposure to the networks business in the United States at a key time for Iberdrola, which wants to grow in markets with high credit ratings and in regulated businesses such as networks,” the Spanish company said in announcing its offer. 

Iberdrola offered $34.25 per share, which represents a premium of approximately 10 percent compared to the weighted average share price of the last 30 days, for the 18.4 percent of Avangrid that it does not currently own. This price represents an investment of $2.48 billion for Iberdrola.

Avangrid issued a statement reporting that an Unaffiliated Committee of its Board of Directors received and is reviewing the offer. They said that no decision has been made and that the committee will “review, evaluate, negotiate, and approve or disapprove the proposal, advised by independent legal and financial advisers, as well as any other alternative proposals or other strategic alternatives that may be available to Avangrid.”