The proposed merger between Avangrid, the US subsidiary of Iberdrola, and PNM Resources has been officially terminated, following challenges in obtaining regulatory approval from the New Mexico Public Regulation Commission.
While Avangrid and PNM had secured all required regulatory approvals for the merger's closure by the end of 2022, the crucial approval from the New Mexico Public Regulation Commission was still pending. The merger agreement, initially announced in October 2020, had its deadline extended to December 31, 2023, awaiting a decision from the New Mexico Supreme Court regarding the January 2022 appeal of the Commission's decision denying the transaction.
The potential $8.3 billion merger deal, encompassing debt, faced uncertainty as 2023 concluded, with Avangrid citing the lack of a clear timeline for resolving the court review and subsequent regulatory actions as reasons for the termination.
In a statement, Avangrid explained, “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.”
The termination also led to the automatic cancellation of the commitment letter, through which Iberdrola had pledged to provide or arrange funds for Avangrid to complete the merger.
Since 2020, Avangrid had been actively pursuing approval for the merger with PNM, aiming to bring over $300 million in benefits to PNM consumers and communities. The collaboration sought to leverage Avangrid's clean energy expertise and Iberdrola, S.A.'s global leadership in the energy transition to assist the state in achieving its clean energy goals.
PNM Resources expressed disappointment in Avangrid's decision, with Pat Vincent-Collawn, PNM Resources Chairman and CEO, stating, “We are greatly disappointed with Avangrid's decision to terminate the merger agreement and its proposed benefits to our customers, communities, and shareholders.” As PNM Resources looks ahead, the focus remains on strategic plans for infrastructure investments to meet future energy needs and deliver long-term earnings growth.
