Iberdrola Ends $4.3 Billion Deal to Buy US Power Firm PNM

(Bloomberg) -- Iberdrola SA’s US unit has terminated a $4.3 billion agreement to buy a local rival, ending three years of legal and regulatory wrangling over the deal.

The 2020 deal to buy New Mexico-based PNM Resources Inc. was terminated because all final regulatory approvals were not received by Dec. 31, Iberdrola’s Avangrid Inc. said in a statement Tuesday. There was still no clear timing on when a resolution might occur, it added.

The collapse of the deal puts a major break of Iberdrola’s ambitions to expand its operations in the US. Still, the Spanish company’s management has repeatedly said it would be open to looking for other options if it couldn’t acquire PNM.

In December 2021, regulators in New Mexico blocked Avangrid’s move to buy PNM, saying it wasn’t in the best interests of consumers in the state. Commissioners cited Avangrid’s poor service track record in northeastern US, as well as issues around a criminal probe of executives at Iberdrola. The probe has since been thrown out in a Madrid court.

Expanding into New Mexico would have offered Avangrid the chance to diversify its client base to warmer states, cutting exposure to high winter peak demands and pipeline constraints. 

The deal was also part of Iberdrola’s plans to increase investments in grid-operations. In November 2022, the utility said that more more than half of its total investments through 2025 would be earmarked for power grids.

PNM said in a separate statement that while its board had approved an extension to the Dec. 31 deadline for securing regulatory approval, Avangrid didn’t accept it and terminated the merger. 

“We are greatly disappointed with Avangrid’s decision,” PNM Chairwoman Pat Vincent-Collawn said in the statement. 

(Updates with background to deal starting in third paragraph)

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