Iberdrola gives up buying the American company PNM Resources

Change of plans, and an important one, of Iberdrola in the United States. The Spanish giant, which for months has become the largest European electricity company by stock market value, announced early this Tuesday morning that it is dropping the purchase operation of the American company PNM Resources through its subsidiary Avangrid. The North American country is one of the largest markets for the energy company chaired by Ignacio Sánchez Galán and fundamental in his growth strategy.

“Avangrid, a company 81.5% owned by Iberdrola, announces on this date its decision to terminate the merger contract signed with PNM Resources on October 20, 2020, as the established conditions have not been met within the period contemplated for this purpose ( …) for the closing of the operation”, reads a statement sent by Iberdrola to the Spanish National Securities Market Commission (CNMV) on the second day of the year and the first day of real activity in the markets.

In response to questions from this newspaper, a company spokesperson calls for the next investor day, scheduled for March 21, where “more details” will be offered about Iberdrola's future plans in the US, “a strategic country for us.” . The stock market reception has not been bad at all: the electricity company's shares have started this Tuesday's session with a rise of close to 1.2%.

The biggest blow for the transaction came a little more than a couple of years ago, in December 2021, when the New Mexico regulator rejected the purchase, indirectly alluding to the Villarejo case: “It is not the right partner at this critical moment in our energy transition,” said the five members of the organization, who unanimously opposed it.

Although the operation – a merger by absorption valued at the time at 8.3 billion dollars (7.52 billion euros at the current exchange rate), debt included – accumulated significant delays after this setback, the directors of the Spanish company – led by Sánchez Galán himself – They had reiterated in the last shareholder meetings and meetings with investors their confidence that it would come to fruition. Until this Tuesday, when the PNM purchase finally comes to nothing.

At the penultimate general meeting of shareholders, held in Bilbao in June 2022, the executive president of Iberdrola was “sure” that the Villarejo case —which had led to the indictment of several executives of the energy company— would not derail the operation. “We have all federal and state permits except one. I am sure that the result of the appeal [presentado para tratar de revertir la decisión inicial] It will be positive,” he noted then.

Five months later, in the update of its strategic plan, Iberdrola included the purchase of PNM, which at that time it valued at 11,000 million euros and which it aspired to close throughout 2023: “We feel quite comfortable and I am convinced that “The agreement is going to be completed,” said Sánchez Galán before dozens of analysts gathered in London.

When it announced the operation, in the fall of 2020—with the world still struggling to leave behind the worst of the pandemic and companies more concerned about the immediate than the future—Iberdrola emphasized that the combination of Avangrid and PNM—which At that time it had 4.1 million supply points, a regulated asset base of $14.4 billion, more than 168,000 kilometers of distribution and transportation networks and approximately 10.9 gigawatts of installed capacity—would accelerate the growth of the Spanish electricity company in USA, its fourth market after Spain, the United Kingdom and Brazil.

The integration of PNM, he said then, was going to give rise to one of the largest companies in the sector in the North American colossus, with 10 regulated electric companies in New York, Connecticut, Maine, Massachusetts, New Mexico and Texas, as well as the third operator of renewable energy in the United States with a total presence in 24 States.

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