Avangrid, the US arm of Spanish energy firm Iberdrola, has ended an $8.3bn (€7.5bn) agreement to buy PNM Resources after failing to secure regulatory approval.
In October 2020, Avangrid announced a merger with smaller NYSE-listed rival PNM in which PNM shareholders were to receive around $4.3bn in cash.
The transaction gave PNM an $8.3bn enterprise value and the merged group would have become a US clean energy company with 10 regulated utilities in six states and the third-largest renewables company with operations in 24 states.
The agreement, which was subject to approval by PNM shareholders, also required approval from several 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 US, Federal Communications Commission and the Nuclear Regulatory Commission.
At the time of the announcement, the companies expected the regulatory approvals to be completed in approximately 12 months.
The merger agreement was extended through 31 December 2023, while awaiting a decision from the New Mexico Supreme Court on the January 2022 appeal of the New Mexico Public Regulation Commission decision denying the transaction.
Avangrid said today that the merger had obtained all the necessary regulatory approvals for the closing of the merger by the end of 2022 except the approval of the New Mexico Public Regulation Commission.
“However, with the close of 2023, there is still no clear timing on the resolution of the court review of the New Mexico regulator’s denial of the merger nor any subsequent regulatory actions. Avangrid has terminated the merger agreement because all final regulatory approvals were not received by 31 December 2023, the end date under the merger agreement after which either Avangrid or PNM could terminate the merger agreement if the merger had not yet been consummated.
“In connection with the termination of the merger agreement, the commitment letter, pursuant to which Iberdrola agreed to provide or arrange for funds to the extent necessary for Avangrid to consummate the merger, terminated automatically by its terms.”
Avangrid said it intends to continue to focus on its growth opportunities, with “over $9bn in incremental capital projects organically secured during the pendency of the merger”.
“While our merger agreement with PNM has been terminated, we remain more than ever steadfast in our commitment to New Mexico in the development of wind and solar renewables, helping explore options in the new hydrogen economy, and delivering on the partnership with the Navajo Nation to achieve its clean energy future.”
PNM said while its board of directors approved an extension, it was not accepted by Avangrid and Avangrid terminated the merger.
“We are greatly disappointed with Avangrid’s decision to terminate the merger agreement and its proposed benefits to our customers, communities and shareholders,” said Pat Vincent-Collawn, the chairman and CEO of PNM.
To read the latest IPE Real Assets magazine click here.
