Avangrid to Be Acquired by Iberdrola
Avangrid announced that Iberdrola will acquire the remaining 18.4% of Avangrid's shares for $35.75 per share in an all-cash deal. This price reflects an 11.4% premium over Avangrid's closing price on March 6, 2024, and a 15.2% premium over the 30-day volume-weighted average. The deal has been unanimously approved by Avangrid's Board, based on the Special Committee's recommendation. The acquisition is expected to close in Q4 2024, pending shareholder and regulatory approval. Avangrid will continue to pay regular quarterly dividends until the transaction closes.
- Iberdrola's acquisition price represents an 11.4% premium over Avangrid's last closing price.
- Shareholders will receive $35.75 per share in cash.
- The offer is a 15.2% premium over the 30-day volume-weighted average price.
- Avangrid will continue to distribute regular quarterly dividends not exceeding $0.440 per share.
- The deal was unanimously approved by Avangrid's Board and Special Committee.
- The transaction is not subject to a financing condition.
- The acquisition still requires multiple regulatory approvals, which could delay or complicate the transaction.
- Shareholder approval is needed from a majority of Avangrid’s common stockholders, not controlled by Iberdrola, which adds uncertainty.
- Potential short-term volatility in Avangrid's stock price due to market speculation until the transaction closes.
Insights
Avangrid's acquisition by Iberdrola offers several financial insights critical for understanding its implications for stakeholders. The
For retail investors, such an acquisition often implies an immediate gain due to the premium. However, strategic long-term holders should consider the broader implications. Post-acquisition, the company will be fully integrated into Iberdrola, potentially leading to synergies that may not be immediately visible but could enhance Iberdrola's operational efficiency and market reach.
That said, investors must also factor in the inherent uncertainty until the deal closes. The acquisition is subject to multiple regulatory approvals, which, while customary, can introduce delays or conditions altering the deal's terms. Additionally, Iberdrola's increased debt to finance the acquisition, although not explicitly detailed, could impact its financial health, which is important for dividend sustainability and future growth prospects.
The legal landscape surrounding this acquisition introduces several key considerations for investors. The transaction's approval hinges on a series of customary conditions including affirmative votes from the holders of a majority of all outstanding shares, excluding those controlled by Iberdrola and its affiliates. Such conditions are designed to protect the interests of minority shareholders by preventing potential conflicts of interest.
This multi-tiered approval process, while standard, is significant as it emphasizes the need for broad shareholder consensus. Furthermore, the transaction awaits approvals from various regulatory bodies such as the Federal Energy Regulatory Commission, Maine Public Utilities Commission and the New York Public Service Commission. These commissions scrutinize the deal to ensure it doesn't negatively impact competition or public interest in their respective regions.
For retail investors, understanding these regulatory checkpoints is important as they can affect the deal's timeline and even its feasibility. Regulatory disapproval or stringent conditions can delay or derail the acquisition, impacting the stock's short-term performance.
Avangrid Shareholders to receive
The
The Board of Directors of Avangrid, acting on the unanimous recommendation of the Unaffiliated Committee of the Board of Directors (the “Special Committee”) that led the consideration of strategic alternatives and the negotiation of the terms of the transaction, unanimously approved the agreement, which is subject to a number of customary conditions, including affirmative votes of (1) the holders of a majority of all outstanding shares of common stock of Avangrid, (2) the holders of a majority of all outstanding shares of common stock held by Avangrid’s shareholders other than Iberdrola, its subsidiaries, and their controlled affiliates and (3) the holders of a majority of the outstanding shares of Avangrid common stock other than Iberdrola, Arizona Merger Sub, Inc., their affiliates, any members of the board of Avangrid who are employed by Iberdrola or its affiliates, any officer of Avangrid and any family members, affiliates or associates of the foregoing.
Pedro Azagra, President and Chief Executive Officer of Avangrid commented, “We are excited about Iberdrola’s continued investment in Avangrid and commitment to
Timing
The transaction is expected to close in the fourth quarter of 2024, subject to the satisfaction of customary closing conditions, including receipt of the shareholder approvals described above and the approval of the Federal Energy Regulatory Commission, the Maine Public Utilities Commission and the New York Public Service Commission. The transaction is not subject to a financing condition.
Advisors
Moelis & Company LLC is serving as financial advisor to the Special Committee, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal advisor to the Special Committee. Latham & Watkins LLP is serving as legal advisor to Avangrid. Morgan Stanley & Co. LLC is serving as financial advisor to Iberdrola, and White & Case LLP and Clifford Chance are serving as legal advisors to Iberdrola.
About Avangrid
Avangrid (NYSE: AGR) aspires to be the leading sustainable energy company in
About Iberdrola
Iberdrola, Europe’s largest electricity utility by market capitalization and one of the world's top three electricity companies, is a leader in renewables, spearheading the energy transition to a low carbon economy. The group supplies energy to almost 100 million people in dozens of countries. With a focus on renewable energy, smart networks and smart solutions for customers, Iberdrola’s main markets include
The company has a workforce of over 42,200 and assets in excess of
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This communication may be deemed to be solicitation material in respect of the proposed transaction involving Avangrid and Parent. In connection with the proposed transaction, Avangrid intends to file with the Securities and Exchange Commission (the “SEC”) and furnish to shareholders a proxy statement and Avangrid and Parent intend to jointly file a transaction statement on Schedule 13E-3 (the “Schedule 13E-3”). This communication is not a substitute for the proxy statement, Schedule 13E-3 or any other document that Avangrid may file with the SEC or send to its shareholders in connection with the proposed transaction. INVESTORS AND SHAREHOLDERS OF AVANGRID ARE URGED TO READ THE PROXY STATEMENT, THE SCHEDULE 13E-3 AND OTHER RELEVANT MATERIALS WHEN THEY BECOME AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED TRANSACTION BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT AVANGRID AND THE PROPOSED TRANSACTION. The materials to be filed by Avangrid will be made available to Avangrid’s investors and shareholders at no expense to them and copies may be obtained free of charge on Avangrid’s website at www.avangrid.com. In addition, all of those materials will be available at no charge on the SEC’s website at www.sec.gov.
Participants in the Solicitation
Avangrid and its directors, executive officers, other members of its management and employees may be deemed to be participants in the solicitation of proxies of Avangrid shareholders in connection with the proposed transaction under SEC rules. Investors and shareholders may obtain more detailed information regarding the names, affiliations and interests of Avangrid’s executive officers and directors in the solicitation by reading Avangrid’s proxy statement for its 2023 annual meeting of shareholders (the “2023 Annual Meeting Proxy Statement”), the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as amended by the Form 10-K/A filed on April 26, 2024, and the proxy statement, Schedule 13E-3 and other relevant materials that will be filed with the SEC in connection with the proposed transaction when they become available. To the extent holdings of securities by potential participants (or the identity of such participants) have changed since the information printed in the 2023 Annual Meeting Proxy Statement, such information has been or will be reflected on Avangrid’s Statements of Change in Ownership on Forms 3 and 4 filed with the SEC. Information concerning the interests of Avangrid’s participants in the solicitation, which may, in some cases, be different than those of the Avangrid’s shareholders generally, will be set forth in the proxy statement relating to the proposed transaction when it becomes available.
Forward-Looking Statements
Certain statements in this report may relate to our future business and financial performance and future events or developments involving us and our subsidiaries that are not purely historical and may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “should,” “would,” “could,” “can,” “expect(s),” “believe(s),” “anticipate(s),” “intend(s),” “plan(s),” “estimate(s),” “project(s),” “assume(s),” “guide(s),” “target(s),” “forecast(s),” “are (is) confident that” and “seek(s)” or the negative of such terms or other variations on such terms or comparable terminology. These forward-looking statements generally include statements regarding the potential transaction between Avangrid and Parent, including any statements regarding the expected timetable for completing the potential transaction, the ability to complete the potential transaction, the expected benefits of the potential transaction, projected financial information, future opportunities, and any other statements regarding Avangrid’s future expectations, beliefs, plans, objectives, results of operations, financial condition and cash flows, or future events or performance. Readers are cautioned that all forward-looking statements are based upon current reasonable beliefs, expectations and assumptions. Avangrid’s business, financial condition, cash flow, and operating results are influenced by many factors, which are often beyond its control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. For a discussion of risk factors and other important factors affecting forward-looking statements, please see Avangrid’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filings and the information filed on Avangrid’s Forms 8-K with the SEC as well as its subsequent SEC filings, and the risks and uncertainties related to the proposed transaction with Parent, including, but not limited to: the expected timing and likelihood of completion of the proposed transaction, including the timing, receipt and terms and conditions of any required shareholder, governmental and regulatory approvals of the proposed transaction that could reduce the anticipated benefits of, or cause the parties to abandon, the transaction, risks that an event, change or other circumstance could give rise to the termination of the merger agreement, risks that competing offers or acquisition proposals for Avangrid could be made, risks related to disruption of management time from ongoing business operations due to the proposed transaction, the risk that the proposed transaction and its announcement could have an adverse effect on the ability of Avangrid to retain and hire key personnel and maintain relationships with its customers and suppliers, and on its operating results and businesses generally, and litigation or administrative proceedings that may arise in connection with the proposed transaction. Other unpredictable or unknown factors not discussed in this communication could also have material adverse effects on forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements. Avangrid does not undertake any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this report, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Other risk factors are detailed from time to time in Avangrid’s reports filed with the SEC and we encourage you to consult such disclosures.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240517716418/en/
Analysts: Charlotte Ancel, Charlotte.Ancel@Avangrid.com, 203-997-7366
Media: Leo Rosales, Leo.Rosales@Avangrid.com, 518-419-2401
Source: Avangrid, Inc.
FAQ
What is the acquisition price for Avangrid (AGR) shares?
How much of a premium does Iberdrola's offer represent for Avangrid (AGR) shares?
When is the Avangrid (AGR) acquisition by Iberdrola expected to close?
Will Avangrid (AGR) continue to pay dividends until the acquisition by Iberdrola is finalized?
What approvals are required for the Iberdrola acquisition of Avangrid (AGR)?
