Dive Brief:
- Iberdrola will acquire 100% of Avangrid, its publicly-traded American subsidiary, in a $2.6 billion transaction approved by both companies’ boards of directors this month, Iberdrola said in a news release Friday. Iberdrola, which already owns 81.6% of Avangrid, will purchase the remaining 18.4% stake for $35.75/share.
- The transaction, which is expected to close in the fourth quarter of 2024, will grow the Spanish energy conglomerate’s exposure to its U.S. networks business, Iberdrola said. Iberdrola plans to make €21.5 billion ($23.4 billion) in grid investments in the U.S., United Kingdom, Brazil and Spain by 2026, including €6.5 billion ($7.1 billion) in those countries’ transmission grids, according to its networks webpage and most recent strategic plan.
- In a May 17 statement, Avangrid President and CEO Pedro Azagra suggested his company will continue business as usual after the transaction closes. “We will continue to serve our customers and build our renewable energy assets [to] achieve our vision to lead the clean energy transition,” he said.
Dive Insight:
Connecticut-based Avangrid’s renewables business, which it says contains the country’s third-largest onshore portfolio, has installed approximately 8.7 GW of onshore wind, solar and biomass capacity in more than 20 states. Construction is underway on Vineyard Wind 1, an 800-GW offshore wind facility that began delivering power to the New England grid earlier this year.
Avangrid has several other offshore wind projects under development, including Kitty Hawk Wind off North Carolina and New England Wind 1 and 2 off Massachusetts. Despite local opposition, supply chain issues, inflation and other factors imperiling U.S. offshore wind development, state and federal permitting processes and workforce performance offer reason for optimism, Avangrid COO of offshore wind Sy Oytan said at a Cleanpower 2024 panel discussion earlier this month.
But two-thirds of Iberdrola’s near-term investments will flow to networks, its other main business line, according to the company’s strategic plan. Avangrid’s U.S. networks business owns and operates eight electric and natural gas utilities serving 3.3 million customers in New York and New England, the company says.
Iberdrola will focus its networks investments on operations in countries with high credit ratings, with 35% going to the U.S., 24% to the U.K., 15% to Spain and 12% to Brazil, the strategic plan says.
“The objective of this transaction is to increase exposure to the networks business in the United States at a key moment for Iberdrola, which wants to grow in markets with strong credit ratings and in regulated businesses such as networks,” Iberdrola said in Friday’s release.
The transmission portion of Iberdrola’s networks investment is aimed at “ensuring new renewable capacity integration and enabling the implementation of new solutions and distributed services,” the company’s networks web page says.
Iberdrola first announced its intention to acquire the remainder of Avangrid’s outstanding shares on March 7. The $35.75/share acquisition price represents an 11.4% premium to Avangrid common stock’s closing price on March 6, “the last unaffected trading day prior to Avangrid’s announcement of receipt of Iberdrola’s unsolicited offer,” Avangrid said.
