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A USD-4.3-billion (EUR 3.92bn) merger between US sustainable energy company Avangrid Inc (NYSE:AGR) and New Mexico-based utilities holding PNM Resources Inc (NYSE:PNM) has collapsed after failing to secure final regulatory approval by the deadline of December 31, 2023.
Avangrid said on Tuesday that it has terminated its 2020 merger agreement with PNM following a regulatory delay in New Mexico, with no clear end in sight.
Avangrid’s plan to acquire PNM had already been greenlit by five federal agencies and the Public Utility Commission of Texas throughout 2021. However, the New Mexico Public Regulation Commission denied its approval in December that year, stating that the potential risks to customers outweigh the deal’s benefits.
The court appeal against the New Mexico regulator’s decision had not been resolved by the agreed deadline, and while PNM’s board of directors approved to extend the merger agreement, Avangrid did not accept the proposal, opting to scrap the deal, PNM said separately.
Avangrid’s majority owner Iberdrola SA (BME:IBE), a Spanish utility, had agreed to provide or arrange funding its North American needed to close the merger. Iberdrola’s commitment letter terminated automatically by its terms, Avangrid said.
PNM Resources, which runs regulated utilities in New Mexico and Texas, signed off on the friendly acquisition by Avangrid in October 2020, in a deal with an enterprise value of around USD 8.3 billion. The resulting entity would have become the third-largest renewable energy company in the US, with operations in 24 states, Iberdrola said at the time.
“While our merger agreement with PNM has been terminated, we remain more than ever steadfast in our commitment to New Mexico in the development of wind and solar renewables, helping explore options in the new hydrogen economy, and delivering on the partnership with the Navajo Nation to achieve its clean energy future,” Avangrid said in Tuesday’s statement.
Pat Vincent-Collawn, PNM Resources Chairman and CEO, for her part said: “We are greatly disappointed with Avangrid’s decision to terminate the merger agreement and its proposed benefits to our customers, communities and shareholders. As we move forward, our strategic plans remain focused on the infrastructure investments necessary to meet the future energy needs of our customers and communities. We look to build upon our strong track record of delivering financial results and continue to target long-term earnings growth of 5%.”
(USD 1.0 = EUR 0.911)
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