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AVANGRID and PNM Resources Announce Merger Plans

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AVANGRID, a leading sustainable energy company, and PNM Resources announced today that their respective boards have approved the merger of PNM Resources into AVANGRID. Ignacio Galán, chairman of AVANGRID and chairman of IBERDROLA Group, said, “This transaction is a consequence of the IBERDROLA Group’s disciplined strategy followed over more than 20 years. This is a friendly transaction, focused on regulated businesses and renewables in highly rated states with legal and regulatory stability and predictability offering future growth opportunities.”

Dennis V. Arriola, AVANGRID’s CEO who will continue as CEO of the combined company, said, “This merger between AVANGRID and PNM Resources is a strategic fit and helps us further our growth in both clean energy distribution and transmission, as well as helping to expand our growing leadership position in renewables.  Our two companies also share the same values as we both are passionate about our customers, employees and the communities we serve. In addition, both AVANGRID and PNM Resources are leaders in environmental, social and governance issues that impact our stakeholders.”

Pat Vincent-Collawn, chairman, president and CEO of PNM Resources, stated, “We are excited to be part of this transaction that provides so many benefits to our customers, communities, employees and shareholders.  Our combined companies provide greater opportunities to invest in the infrastructure and new technologies that will help us navigate our transition to clean energy while maintaining our commitments to our local teams and communities.”

AVANGRID will add two independent board members from PNM Resources to its board of directors and one independent board member from PNM Resources will join the AVANGRID Networks board.

Key Highlights

  • The transaction is expected to be EPS accretive in the first full year after closing.  
  • As a result of PNM’s earnings from regulated distribution and transmission assets, it is expected that AVANGRID’s regulated earnings contribution post-transaction will exceed 80%.  This proportion of regulated earnings will support AVANGRID’s fast-growing renewables business over the next decade.
  • The purchase price represents a premium of 10% over the PNM`s share price as of Tuesday 20th October and 19.3% over the average PNM share price during the 30 days prior to 21st  October. 
  • AVANGRID’s majority shareholder, Iberdrola, has provided the company with a funding commitment letter for the entire equity proceeds for the transaction. 
  • As a result of this transaction, PNM’s shareholders will receive approximately $4.318 billion in cash. 

The agreement between AVANGRID and PNM Resources is subject to approval by PNM Resources shareholders. In addition, the transaction will require approval from a number of state and federal regulators including the New Mexico Public Regulation Commission, Public Utility Commission of Texas, Federal Energy Regulatory Commission, Hart Scott Rodino Clearance, Committee on Foreign Investment in the United States, Federal Communications Commission and the Nuclear Regulatory Commission.  Regulatory approvals are expected to be completed in approximately 12 months.

AVANGRID currently owns 1,900 MW of renewable energy and a pipeline of 1,400 MW of renewables assets in New Mexico and Texas.  In addition, Iberdrola operates a retail business in Texas. For more than 15 years, Iberdrola has also funded the King Felipe VI Chair in the Department of Electrical and Computer Engineering at the University of New Mexico.

From Warships to Wind Turbines: Spain Shipyard Eyes EU Aid in Pivot to Wind Power

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FILE PHOTO: DJ Mattaar / Shutterstock

Spanish shipbuilder Navantia is stepping up its bet on offshore wind energy, a venture that stands to benefit from the European Union’s fiscal response to the pandemic.

The landmark 750 billion-euro ($890 billion) pandemic-recovery aid will encourage Spain to invest more in clean energy. That could galvanize the company’s recent pivot into sea-based power projects, said Managing Director Javier Herrador del Rio. With demand flagging for its military vessels, Navantia has branched into building the massive foundations for wind turbines that can stretch out of the water as high as a 50-story office building.

The comment underscores how companies across the EU are gearing up to take part in the bloc’s biggest-ever stimulus package. Europe’s leaders have said they want countries to spend a significant portion of the funds on making the regional economy more carbon-neutral. Navantia’s green projects might become a test case for the program.

‘Highly Cyclical’

Spain and Italy are poised to be among the largest recipients of the funds and both countries are hashing out details of how to spend the money. The fiscal jolt is an opportunity for the Spanish administration to start investing in offshore wind farms in the northern Galicia and Basque regions and in southern Andalusia, Herrador del Rio said.

Naval shipbuilding “is highly cyclical and even more so during such volatile times like we’re living through now – when we exit one crisis and then fall into another,” the managing director of Navantia’s Bay of Cadiz Shipyard said in an interview. Rocky economic times limited Spain’s ability to invest in new ships and forced state-owned Navantia into more manufacturing areas. The offshore wind became a strategic priority in 2018, he said.

The firm’s fortunes have ebbed since the 1980s when demand was high for made-in-Europe warships and oil tankers and the company employed about 40,000. While staff has since dropped to about one-tenth of that, it was still able to take on Saudi Arabia’s 2018 order of five corvettes for its navy, one of Navantia’s few major shipbuilding contracts in recent years.

Incipient Industry

While Spain was a global pioneer in solar and wind projects, the offshore wind-park industry is still quite young. Contracts Navantia has signed in the sector don’t generate nearly as much revenue as building submarines and aircraft carriers.

Overall, companies globally are operating about 30 gigawatts of offshore wind energy, said Imogen Brown, an analyst at BloombergNEF, an energy research firm. That’s a fraction of the 611 gigawatts of land-based wind projects, based on data through 2019, she said.

Most of the turbines are in the North Sea, off the coasts of the U.K., the Netherlands, Denmark and Germany. The strong winds and comparatively shallow seabed have allowed major players such as Denmark’s Bladt Industries and the Netherlands’ Sif Group to anchor what is known as “bottom-fixed” turbines to the ocean floor.

Navantia has received commissions for 10 projects since 2014, including orders to manufacture several dozen bottom-fixed turbines for Iberdrola’s 500-megawatt offshore wind farm in Brittany.

The Mediterranean Sea that borders much of Spain has relatively deep waters. That has pushed Navantia and other manufacturers, including Italian shipbuilder Saipem SpA, to shift their focus to floating wind turbines. But the technology is still incipient and there’s not a standardized design, Brown said.

“It’s only demonstration projects that have been commissioned so far,” she said. “We think bottom-fixed wind turbines will still be the driver in the market pre-2030.”

Europe’s increased funding for clean-energy projects will help to bolster investments in technologies to improve floating projects, Herrador del Rio said at the company’s Puerto Real shipyard near the Strait of Gibraltar, the strategic entrance to the Mediterranean from the Atlantic Ocean. That funding will eventually lead to building more wind farms off the Spanish coasts and in the Mediterranean Sea.

“Sooner or later it will become a reality,” he said. “I’m convinced.”