US clean energy company Avangrid has cancelled a proposed merger with the Public Services Company of New Mexico (PNM), following two years of delays in the approval process.
PNM and Avangrid, a subsidiary of Spanish renewables company Iberdrola, signed the agreement in October 2020. Valued at US$8.3 billion, the deal would see PNM become a wholly-owned subsidiary of Avangrid, and PNM shareholders receive US$3.4 billion in cash. The merger has been delayed by investigations into the companies by the New Mexico Public Regulation Commission (NMPRC), which culminated the companies launching an appeal with the New Mexico Supreme Court to intercede on their behalf in January 2022.
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However, the court has not deadline to act, and the companies agreed upon a date of 31 December 2023, whereby either could terminate the merger agreement. With the Supreme Court still not having acted, Avangrid has elected to use this option.
“Avangrid and PNM had obtained all the necessary regulatory approvals for the closing of the merger by the end of 2022 except the approval of the NMPRC,” said Avangrid in a statement announcing the cancellation. “However, with the close of 2023 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.”
The deal was subject to approvals from a number of government bodies, including the Federal Energy Regulatory Commission (FERC) and the regulators in Texas and New Mexico, the two states where PNM operates.
While the Public Utility Commission of Texas (PUCT) approved the merger, NMPRC asked the companies for additional information regarding their activities in 2021, including records of fines accrued by Avangrid at their operations in the states of Maine and Connecticut, and information on the role of Iberdrola CEO Ignacio Sanchez Galan in a Spanish police probe into a 2009 charge of spying.
Avangrid provided this information, and Iberdrola argued that the implication of Sanchez Galan was not an indictment of guilt and so not relevant to the merger, but the NMPRC has still not granted approval to the merger, which has delayed the approval process indefinitely, and prompted the companies to appeal to the New Mexico Supreme Court.
The news is a setback for Avangrid, which sought to expand its US operations in 2023. In August, the company announced plans to build its first solar project in California, and deployed a new form of transmission monitoring technology at its transmission lines in New York State.