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Avangrid (AGR) to be Acquired by Iberdrola in an All-Cash Deal

Avangrid Inc. AGR announced that it has entered into a definitive agreement with Iberdrola S.A. Per this deal, Iberdrola will acquire the remaining 18.4% of the issued and outstanding shares of common stock of Avangrid, that it does not currently own, for $35.75 per share in an all-cash transaction.

In March 2024, Iberdrola made a non-binding cash offer for Avangrid at $34.25 per share. So, the revised offer increases the per share value of Avangrid by $1.50. The transaction is expected to be closed in the fourth quarter of 2024, subject to the receipt of approval from shareholders and regulatory authorities.

AGR is expected to continue its operations and pay out cash dividend to its shareholders till the closure of the transaction. The company, as a wholly owned subsidiary of Iberdrola Group, will continue to serve its customers and build a renewable energy portfolio to achieve its clean energy transition goal.

Avangrid’s Clean Energy Outlook

Management plans to create a clean generation portfolio and achieve Scope 1 and Scope 2 carbon neutrality goals by 2035. Also, it aims to reduce Scope 1 greenhouse gas emissions by 35% within 2025 from the 2015 baseline.

To further spread its clean energy generation, it has entered in a partnership with Navajo Tribal Utility Authority Generation, Inc., a wholly owned subsidiary of Navajo Tribal Utility Authority. Per this agreement, both companies will jointly explore opportunities for developing up to 1 gigawatt of renewable energy generation, including solar, wind, hydrogen and backup battery storage, on the reservation of Navajo Nation located in portions of New Mexico, Utah and Arizona.

Avangrid continues to work on its offshore wind project Vineyard Wind 1. Once fully operational, this wind project will generate 806 megawatts of clean energy, sufficient to power 400,000 homes and businesses.

Transition in Energy Space

Operators in the U.S. electric power sector are gradually moving toward cleaner sources of energy. Per U.S. Energy Information Administration, the annual share of U.S. electricity generation from renewable energy sources will rise from 23% in 2023 to 24% in 2024 and touch 25% in 2025, as a result of the continuing addition of solar and wind-generating capacity. The passage of Inflation Reduction Act will support and accelerate the utilities’ transition toward clean energy sources.

Other electric utilities, also adopting measures to supply clean and reliable energy to their customers, are Duke Energy DUK, DTE Energy DTE and Alliant Energy LNT.

Duke Energy has been making strong progress in reducing carbon emissions from electricity generation. DUK is gradually shutting down its coal-fired generation units and adding more clean energy projects in its portfolio, which will enable the company to duly meet its target of achieving net-zero carbon emissions in 2050.

DTE Energy remains on track for trimming carbon emissions and plans to ultimately end its use of coal-fired power plants in 2032. DTE is committed to a net zero carbon emissions goal by 2050 for its electric and gas utility operations. It aims to invest more than $11 billion in clean energy transition over the next 10 years.

Alliant Energy continues to review and update its sustainable energy plans and clean energy vision based on future economic developments, evolving energy technologies and emerging trends in the communities it serves. Successful execution of its clean energy strategies will allow LNT to achieve net-zero greenhouse gas emissions by 2050.

Price Performance

In the past six months, shares of Avangrid have risen 15% compared with the industry’s 9.1% growth.



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Zacks Rank

Avangrid currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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