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AVANGRID (AGR) Receives Proposal for Its Outstanding Shares

AVANGRID, Inc.’s AGR 81.6% of outstanding shares are already owned by a Spanish company named Iberdrola SA. Recently, Iberdrola has offered to buy the remaining 18.4% of AVANGRID’s outstanding shares for about $2.5 billion as it looks to expand its footprint in the American renewable energy market to build and operate electrical grids.

Iberdrola has made a non-binding cash offer for AVANGRID at $34.25 per share, which indicates a 10% premium over its average price over the previous 30 days. AVANGRID said in a statement that it has received the proposition but not a formal offer and that its board will review it.

This proposal came after AVANGRID abandoned its plan to acquire PNM Resources PNM, another U.S. utility, in December. The all-cash deal of $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.

The deal was scrapped after years of negotiating with authorities over the acquisition. This left the Spanish company with the financial resources to do an alternative transaction.

AGR’s Focus on Renewable Energy

While the merger agreement with PNM Resources came to an end, AVANGRID remains focused on developing New Mexico's wind and solar energy resources. In 2023, AGR secured capital projects, worth $9 billion, organically during the pendency of the merger.  

AGR intends to continue to focus on its strong growth prospects, even if it gets acquired by Iberdrola.

In Renewables, AGR reached 8.6 gigawatt of wind and solar capacity. The company renegotiated three power purchase agreement (PPA) contracts totaling 470 megawatts (MW). In addition, it has another 998 MW in new projects under construction all ready to build all of them with PPAs. Notably, 700 MW of these projects are to support data centers with clean energy from onshore wind and solar. AGR will repower more than 4,600 MW of its existing portfolio in the coming years.

Renewable Energy Generation on the Rise

According to the U.S. Energy Information Administration (EIA), the annual share of U.S. electricity generation from renewable energy sources will increase 24% and 26% in 2024 and 2025, respectively. The EIA forecasts that U.S. solar generation will grow 43% in 2024 and wind generation will rise 6%. 

AVANGRID is committed to lowering emissions and adding more renewable sources to the generation portfolio. Along with AGR, some other electric power industry companies like Xcel Energy Inc. XEL and NextEra Energy, Inc. NEE are also adopting measures to meet clean-energy targets.

Xcel Energy is reducing coal usage and targets lowering emissions by at least 80% by 2030 and achieving carbon neutrality by 2050. After completing six wind projects with a total capacity of 1,500 MW in 2020, the company completed four wind farms, adding another 800 MW of clean energy generation capacity to its portfolio. XEL’s total wind capacity is 11,000 MW, out of which 4,500 MW is from owned wind farms.

The company’s long-term (three- to-five year) earnings growth rate is 6.02%. The Zacks Consensus Estimate for 2024 EPS indicates a year-over-year increase of 6.6%.

NextEra Energy is aiming to reduce total carbon emissions by 67% within 2025 from the 2005 level. The company continues to work on its strategy of making a long-term investment in clean-energy assets. It expects to be able to add 33-42 gigawatts of new renewables in the 2023-2026 period to the generation portfolio via clean-energy investments.

NEE’s long-term earnings growth rate is 8.18%. The Zacks Consensus Estimate for 2024 EPS indicates a year-over-year increase of 8.5%.

Price Performance

In the past three months, shares of AGR have risen 13% against the industry’s 3.8% decline.

 

Zacks Investment Research
Zacks Investment Research


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Zacks Rank

AGR currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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