Shared of power and utility company PNM Resources (PNM) - Get PNM Resources, Inc. Report jumped on Wednesday after it said it cut a deal to be bought by Spanish utility giant Iberdrola for $4.3 billion, making Iberdrola’s Avangrid business the third-largest renewable energy operator in the U.S.
Shares of PNM Resources gained more than 9% after Iberdrola, which owns a majority stake in Avangrid, said it would buy PNM Resources for $50.30 per PNM Resources share, as well as a 10% premium. The deal, which is subject to regulatory and shareholder approvals, is expected to close by the end of the year, the companies said.
The agreement strengthens Iberdrola’s position as a global energy giant with a strong foothold in clean, renewable energy, and gives it an immediate presence in the lucrative U.S. market. The deal with Albuquerque-based PNM marks Iberdrola’s eighth acquisition since the start of the pandemic.
It also reflects increasing focus on the transition to cleaner energy in the U.S., driven in large part by economics that favoring wind and solar farms over coal - despite President Donald Trump’s efforts to water down environmental rules and reinvigorate the U.S. coal mining industry.
Absorbing PNM into Avangrid will create an operator present in 24 U.S. states, and bring together companies with a combined market value topping $20 billion. The merged company will have assets worth $40 billion, generate core earnings of around $2.5 billion and net profit of $850 million, Iberdrola said.
CEO Ignacio Galan dubbed the deal a “friendly transaction, focused on regulated businesses and renewables in highly rated states with legal and regulatory stability and predictability offering future growth opportunities.”
Shares of PNM Resources were up 8.53% at $49.60 in trading on Wednesday.