(Oct. 21, 2020) — AVANGRID (NYSE: AGR), a leading sustainable energy company, and PNM Resources (NYSE: PNM) announced today that their respective boards have approved the merger of PNM Resources into AVANGRID.
Ignacio Galán, chairman of AVANGRID and chairman of IBERDROLA Group, said: “This transaction is a consequence of the IBERDROLA Group’s disciplined strategy followed over more than 20 years. This is a friendly transaction, focused on regulated businesses and renewables in highly rated states with legal and regulatory stability and predictability offering future growth opportunities.”
Dennis V. Arriola, AVANGRID’s CEO who will continue as CEO of the combined Company said: “This merger between AVANGRID and PNM Resources is a strategic fit and helps us further our growth in both clean energy distribution and transmission, as well as helping to expand our growing leadership position in renewables. Our two companies also share the same values as we both are passionate about our customers, employees and the communities we serve. In addition, both AVANGRID and PNM Resources are leaders in environmental, social and governance issues that impact our stakeholders.”
Pat Vincent-Collawn, chairman, president and CEO of PNM Resources stated: “We are excited to be part of this transaction that provides so many benefits to our customers, communities, employees and shareholders. Our combined companies provide greater opportunities to invest in the infrastructure and new technologies that will help us navigate our transition to clean energy while maintaining our commitments to our local teams and communities.”
AVANGRID will add two independent board members from PNM Resources to its board of directors and one independent board member from PNM Resources will join the AVANGRID Networks board.
- The transaction is expected to be EPS accretive in the first full year after closing.
- As a result of PNM’s earnings from regulated distribution and transmission assets, it is expected that AVANGRID’s regulated earnings contribution post-transaction will exceed 80%. This proportion of regulated earnings will support AVANGRID’s fast growing renewables business over the next decade.
- The purchase price represents a premium of 10% over the PNM`s share price as of Tuesday 20th October and 19.3% over the average PNM share price during the 30 days prior to 21st October.
- AVANGRID’s majority shareholder, Iberdrola, has provided the company with a funding commitment letter for the entire equity proceeds for the transaction.
- As a result of this transaction, PNM’s shareholders will receive approximately $4.318 billion in cash.
The agreement between AVANGRID and PNM Resources is subject to approval by PNM Resources shareholders. In addition, the transaction will require approval from a number of state and federal regulators including the New Mexico Public Regulation Commission, Public Utility Commission of Texas, Federal Energy Regulatory Commission, Hart Scott Rodino Clearance, Committee on Foreign Investment in the United States, Federal Communications Commission and the Nuclear Regulatory Commission. Regulatory approvals are expected to be completed in approximately 12 months.
AVANGRID currently owns 1,900 MW of renewable energy and a pipeline of 1,400 MW of renewables assets in New Mexico and Texas. In addition, Iberdrola operates a retail business in Texas. For more than 15 years, Iberdrola has also funded the King Felipe VI Chair in the Department of Electrical and Computer Engineering at the University of New Mexico.