The leaders of Avangrid Inc. have pulled the plug on their plan to buy PNM Resources Inc. after a long—and still unresolved—delay in getting New Mexico regulators’ approval.
Avangrid, the U.S. arm of Spanish energy conglomerate Iberdrola, in October 2020 agreed to purchase Albuquerque-based PNM in a deal valued at about $8 billion. The two companies received in due time all the regulatory clearances they need bar that of the New Mexico Public Regulation Commission. That body’s members raised objections to a proposed benefits agreement worth about $300 million, citing concerns about the service track record of Avangrid’s Maine utility as well as an investigation into alleged spying by three Iberdrola executives.
The teams at PNM and Avangrid repeatedly pushed out the deadline for their proposed combination while seeking a rehearing of their case. The New Mexico Supreme Court heard arguments on the plan late last summer but hasn’t yet ruled on the case. The prospect of that taking a while longer led to Avangrid walking away.
“There is still no clear timing on the resolution of the court review of the New Mexico regulator’s denial of the merger nor any subsequent regulatory actions,” Avangrid officials said in a Jan. 2 statement. “Avangrid has terminated the merger agreement because all final regulatory approvals were not received by December 31, 2023, the end date under the merger agreement after which either Avangrid or PNM could terminate the merger agreement if the merger had not yet been consummated.”
PNM Chairman and CEO Pat Vincent-Collawn and her team did push for another deadline extension but were told on New Year’s Eve that their peers at Avangrid weren’t willing to continue down a shared path.
“We are greatly disappointed with Avangrid's decision,” Vincent-Collawn said in a statement. “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%.”
Word of the failure of this deal comes nearly nine months after leaders of American Electric Power Co. Inc. and Algonquin Power & Utilities Corp. called off their plan for the latter to pay about $2.6 billion for AEP's Kentucky Power Co. unit. That proposed acquisition had run into opposition from the Federal Energy Regulatory Commission, which said Algonquin hadn't provided adequate assurances about stopping transmission rates from rising. AEP executives have since refreshed their strategy for Kentucky Power.
The PNM team in October issued new guidance on the company’s planned capital investments through 2027 in its New Mexico and Texas service areas. Those investments are expected to total $1.17 billion this year and $1.25 billion in 2025 as PNM seeks to meet rate base growth that’s expected to top 10% annually through 2027. Vincent-Collawn and CFO Lisa Eden will report the company’s fourth-quarter results early next month.
For their part, Avangrid’s leaders have set out plans to invest more than $9 billion in coming years into the operations of their New York and Maine utilities as well as in clean energy transmission projects in New York and in the Vineyard Wind project offshore Massachusetts.
Shares of PNM (Ticker: PNM) were down nearly 6% to $39.23 in midday trading Jan. 2, a move that cut nearly $200 million from the company’s market capitalization. Over the past six months, the stock has fallen about 14%. By contrast, Avangrid shares (Ticker: AGR) were up more than 3% to $33.50 on news that its PNM plan is no more.