Iberdrola has signed an agreement to acquire 88% of Electricity North West (ENW) in the United Kingdom for an equity value of £2.1 billion (US$2.7 billion).
BNP Paribas and Barclays advised Iberdrola in the deal, which values 100% of the company, including debt, at around €5 billion (US$5.48 billion).
Iberdrola and a consortium of investors from Japan, led by Kansai Electric Power, will retain 12% of ENW's capital, and have signed a shareholders' agreement to collaborate on a long-term basis.
The sellers, other than Kansai Electric, Equitix and Chinese state-owned CNIC, have exited in full. They were advised by Jefferies. Ashurst acted as legal counsel to Equitix.
According to Iberdrola, the acquisition is consistent with its strategy to invest in electricity networks and in countries with strong credit ratings, such as the AA-rated UK.
Top investment destination
Since Iberdrola‘s takeover of ScottishPower in 2007, the UK has been one of the leading investment destinations for the company, where it has since invested around £30 billion. ScottishPower is the only 100% green integrated utility in the UK.
With the completion of the deal, the UK becomes Iberdrola’s leading market by regulated asset base, which is valued at approximately €14 billion, just ahead of the United States.
"This transaction reinforces our commitment to investing significantly in electricity networks, which are a critical component for supporting the electrification and decarbonization of the economy," says Iberdrola executive chairman Ignacio Galan.
"The agreement is also consistent with our strategy to invest in countries that have ambitious investment plans and stable and predictable regulations."
Geographically, ENW is located between the two existing ScottishPower networks license areas, central and southern Scotland and Merseyside and North Wales.
ENW distributes electricity to almost five million people in the Northwest of England, in locations such as Manchester, Lancaster and Barrow, and has approximately 60,000 kilometres of electricity distribution networks.
Growing UK network
The acquisition accelerates Iberdrola's commitment to grow its electricity networks business, with the company now becoming the second largest electricity network operator in the UK.
Iberdrola will now distribute electricity to around 12 million people in the UK, across a network that spans more than 170,000 kilometres. In addition, Iberdrola will employ more than 8,500 people in the country.
As well as being a major investor in renewable energy, ScottishPower owns and operates the transmission and distribution networks in south-central Scotland and the distribution network in Merseyside, North Wales and Cheshire. It is also one of the largest energy suppliers in the country, with 4.2 million customers.
Currently, Iberdrola has 40 onshore wind farms and two offshore wind farms in operation in the UK. The total capacity of renewables in operation in the UK exceeds 3,000 megawatts, enough to power the equivalent of more than two million homes, free of emissions.
As part of its growth plans, the company is building the East Anglia Three offshore wind farm, the second largest in the world, with a total capacity of 1,400MW.
