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Spanish renewables group Iberdrola has called off its planned $8bn acquisition of PNM Resources, cancelling a deal that would have transformed its Avangrid subsidiary into one of the biggest companies in the US utilities sector.
Avangrid said on Tuesday it was exercising a right to terminate the deal because it had been rejected by one regulator in New Mexico in 2021 and the company was still bogged down in appealing against the decision in the courts.
Scrapping the agreement will force a rethink of Iberdrola’s plans in the US, where the transaction would have made Avangrid the third-biggest renewable energy company in the country. The Spanish group has a presence in more than a dozen countries but has made the US its principal investment target.
New Mexico’s Public Regulation Commission had rejected the deal, worth $8.3bn including debt, partly due to concerns over “quality of service issues” at Avangrid.
It also cited the fact that Ignacio Galán, Iberdrola’s chair, had been placed under criminal investigation as part of a probe into ties between Spanish companies and a former police officer involved in a series of high-profile scandals. A Spanish court closed the investigation into Galán in June 2022 and the company has denied any wrongdoing.
The deal had been approved by every other federal and state regulator involved.
Avangrid had appealed against the New Mexico decision, but on Tuesday the company said: “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.”
It said the terms of the deal allowed both parties to terminate the transaction “if the merger had not yet been consummated” by December 31 2023.
In Iberdrola’s 2023-25 strategic plan, the US was due to receive 47 per cent of the company’s global investments in both power grids and renewable energy production, including the cost of the PNM acquisition and €2bn it planned to invest in the business.
Despite the cancellation, Avangrid said it remained “steadfast” in its commitment to New Mexico and the US as a whole and would continue working on a series of other multibillion-dollar investments.
These include a $2bn investment in clean energy transmission in New York, upgrading more than $5bn of existing wind power assets using incentives in the US Inflation Reduction Act, and new projects including Vineyard Wind, the country’s first large-scale offshore wind project.
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