Iberdrola secures full ownership of Avangrid in strategic $2.5bn acquisition

Iberdrola has finalized a pivotal agreement to purchase the remaining 18.4% stake in its U.S. subsidiary, Avangrid, consolidating full ownership of the company. This strategic acquisition, valued at $35.75 per share, translates into a total investment of approximately $2.551 billion (about €2.348 billion, at a 1.0866 EUR/USD exchange rate). The transaction was unanimously approved by the Boards of Directors of both Iberdrola and Avangrid, following a thorough review by a Special Committee of independent directors at Avangrid.

Transaction Details and Financial Implications

The agreed purchase price of $35.75 per share marks a significant increase from Iberdrola’s initial offer of $34.25 per share, emphasizing the value Iberdrola places on gaining full control over Avangrid. The acquisition will lead to Avangrid’s delisting from the New York Stock Exchange, signaling a new chapter for the company as a fully integrated part of Iberdrola’s global operations.

Strategic Rationale Behind the Acquisition

Iberdrola’s move to acquire full ownership of Avangrid underscores its commitment to expanding its presence in the networks business within the United States, a market known for its strong credit ratings and regulatory stability. This acquisition aligns with Iberdrola’s strategic focus on regulated businesses and is poised to strengthen its portfolio in a crucial period of growth.

Regulatory and Shareholder Approvals

The completion of the acquisition is subject to the approval of Avangrid’s shareholders and various regulatory bodies, including the Federal Energy Regulatory Commission and state regulatory commissions in New York and Maine. These approvals are critical to the seamless integration of Avangrid into Iberdrola’s operations.

Avangrid’s Business Profile and Performance

Headquartered in Connecticut, Avangrid boasts $44 billion in assets with operations spanning 24 U.S. states. The company’s core business areas include networks and renewable energy. In the networks sector, Avangrid serves over 3.3 million customers through its eight electric and natural gas companies in New York and New England. Meanwhile, its renewable energy segment manages a substantial portfolio of generation facilities across the United States. Avangrid’s robust performance in 2023 included an adjusted gross operating profit (EBITDA) of $2.43 billion, reflecting its solid operational success.

The acquisition of Avangrid represents a strategic enhancement of Iberdrola’s investment in the American energy market, particularly in renewable and network operations. By taking full ownership, Iberdrola not only secures more direct control over these assets but also reinforces its commitment to leading the energy transition in the U.S.