Iberdrola’s subsidiary purchase bid would see greater exposure to US networks business

Spanish utility company Iberdrola has launched an offer to acquire the remaining share of its US subsidiary Avangrid. It said on Thursday it is launching a bid to acquire the outstanding 18.4% stake that it does not hold in a deal that would amount to about $2.49 billion (€2.28bn).

Iberdrola, a pioneer in spearheading the global development of green hydrogen, said it is offering $34.25 per share, which represents a premium of approximately 10% compared to the weighted average share price of the last 30 days. The Spanish firm said in a statement: “The objective of this transaction is to increase exposure to the networks business in the United States at a key time for Iberdrola, which wants to grow in markets with high credit ratings and in regulated businesses such as networks.”

Gaining greater US footprint and market share

Headquartered in Connecticut, Avangrid currently has $44 billion in assets and operations in 24 US states. It has two main businesses areas, namely networks and renewables.

Through its networks business, Avangrid owns and operates eight electric and natural gas companies, serving more than 3.3 million customers in New York and New England. And through its renewable energy business, Avangrid owns and operates a portfolio of renewable energy generation facilities throughout the US. As of today, that company has 8,000 employees.

In 2023, Avangrid posted adjusted gross operating profit (EBITDA) of $2.43 billion, up from $2.246 billion a year earlier.

Iberdrola reported to the National Securities Market Commission (CNMV), that it was offering $34.25 per share. Currently, the Spanish utility already owns approximately 81.6% of the US company.

Growing influence in the global green energy agenda

Based in Bilbao, Iberdrola has a workforce of about 40,000 employees serving around 30 million customers. Scottish Power is among its subsidiaries. 

At December’s COP28 in Dubai, Iberdrola further underscored its renewables credentials when it and fellow global green energy giant Masdar announced a €15 billion strategic partnership agreement to evaluate the joint development of offshore wind and green hydrogen projects in key markets including Germany, UK and the USA.

This followed the parties’ successful co-investment in Baltic Eagle, in Germany. The new milestone of the alliance seeks to achieve further co-investment in relation to the 1,400-megawatt (MW) UK East Anglia 3 offshore wind project. The deal could be signed by the end of Q1 2024.