Iberdrola to forge $20bn US clean energy titan

Iberdrola’s 2021 deal will see its Avangrid energy business operating in 24 US states. (Shutterstock)
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Updated 22 October 2020

Iberdrola to forge $20bn US clean energy titan

  • Green energy targets and increasing investor interest in protecting the environment have buoyed Iberdrola

MADRID: Spain’s Iberdrola announced a deal worth $8.3 billion including debt on Wednesday, adding PNM Resources to its Avangrid business to create the third-largest US renewable energy operator.

Absorbing PNM into Avangrid will create an operator present in 24 states, Iberdrola said, and bring together firms with a combined market value topping $20 billion.

Reuters reported on Tuesday that the deal was being discussed.

PNM’s board unanimously approved the $4.3 billion offer to its shareholders of $50.3 per share, the filing said. Iberdrola expects the deal to close in 2021 and start boosting financial results from the first year.

Green energy targets and increasing investor interest in protecting the environment have buoyed Iberdrola and other renewables-focused utilities.

The pandemic has also seen US utilities look harder at consolidation to cut costs and spur investment.

Active in New Mexico and Texas, PNM gives Avangrid a route to expand its regulated business beyond the US northeast.

PNM could also benefit from Avangrid’s renewables experience as it works to cut emissions. A plan has now been approved to close its coal-fired San Juan plant in 2022, Iberdrola said.

Iberdrola said the merged company would have assets worth $40 billion, generate core earnings of around $2.5 billion and net profit of $850 million.

This is Iberdrola’s eighth deal this year as part of a €10 billion ($11.85 billion) investment drive of which it has already spent more than €6.6 billion. It has shopped for assets in France, Australia and Japan.

CEO Ignacio Galan said his strategy consisted of: “Friendly transactions, focused on regulated businesses and renewable energy, in countries with good credit ratings and legal and regulatory stability, offering opportunities for future growth.”

Separately on Wednesday, Iberdrola reported nine-month net profit growth of 4.7 percent and said it still expected growth of mid to high-single digit in 2020.


Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

Updated 27 November 2020

Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

  • Tokyo core CPI marks biggest annual drop since May 2012
  • Data suggests nationwide consumer prices to stay weak

TOKYO: Core consumer prices in Tokyo suffered their biggest annual drop in more than eight years, data showed on Friday, an indication the hit to consumption from the coronavirus crisis continued to heap deflationary pressure on the economy.
The data, which is considered a leading indicator of nationwide price trends, reinforces market expectations that inflation will remain distant from the Bank of Japan’s 2% target for the foreseeable future.
“Consumer prices will continue to hover on a weak note as any economic recovery will be moderate,” said Dai-ichi Life Research Institute, which expects nationwide core consumer prices to fall 0.5% in the fiscal year ending March 2021.
The core consumer price index (CPI) for Japan’s capital, which includes oil products but excludes fresh food prices, fell 0.7% in November from a year earlier, government data showed, matching a median market forecast.
It followed a 0.5% drop in October and marked the biggest annual drop since May 2012, underscoring the challenge policymakers face in battling headwinds to growth from COVID-19.
The slump in fuel costs and the impact of a government campaign offering discounts to domestic travel weighed on Tokyo consumer prices, the data showed.
Japan’s economy expanded in July-September from a record post-war slump in the second quarter, when lockdown measures to prevent the spread of the virus cooled consumption and paralyzed business activity.
Analysts, however, expect any recovery to be modest with a resurgence in global and domestic infections clouding the outlook, keeping pressure on policymakers to maintain or even ramp up stimulus.