Published on 3 Jan 2024 on Zacks via Yahoo Finance

AVANGRID (AGR) Scraps $4.3B Merge Deal, Focuses on Renewables

AVANGRID, Inc. AGR announced that it has terminated its acquisition of PNM Resources PNM because it could not receive all the necessary regulatory approvals. Under the proposal, Avangrid would have acquired PNM Resources and its two utilities — Public Service Co. of New Mexico and Texas New Mexico Power.The all-cash deal of approximately $4.3 billion would have given Iberdrola and Avangrid access to a state where more solar and wind energy could be produced and exported to bigger markets.

Reasons for Termination

The merger agreement, announced in October 2020, was expected to be completed in fourth-quarter 2021, post the approval of the New Mexico Public Regulation Commission (“NMPRC”). However, following the rejection by NMPRC, the companies filed an appeal to the New Mexico Supreme Court against the decision.In March 2023, PNM Resources, Avangrid and NMPRC filed a combined request before the New Mexico Supreme Court to reject the companies' appeal of the December 2021 NMPRC refusal and return the case to NMPRC.After continuous delay, both companies signed an amendment of the merger agreement to push the closure date to Dec 31, 2023, by their mutual consent. With the close of 2023, there was neither any clear timing on the resolution of the court’s review of the New Mexico regulator’s denial of the merger nor any subsequent regulatory action. The merger agreement was set to expire on Dec 31, 2023, after which either AVANGRID or PNM Resources might cancel it if the merger had not yet been completed. Avangrid terminated the agreement due to the failure to get the necessary final regulatory clearances by the date.In the context of the termination of the Merger Agreement, the terms of the Commitment Letter, which stipulated to provide or arrange financing to the extent required for the completion of the Merger for Avangrid, automatically terminated the Merger Agreement.