Proxy advisers back Iberdrola’s agreed buyout of Avangrid

Two independent proxy firms have recommended that shareholders of Avangrid Inc (NYSE:AGR) vote in support of the US energy services and delivery company’s agreed USD-2.55-billion (EUR 2.29bn) buyout by its largest shareholder, Spanish utility Iberdrola SA (BME:IBE).

Institutional Shareholder Services Inc (ISS) and Glass, Lewis & Co have issued positive reports after considering various factors, including that the agreed transaction presents an incremental market premium to investors, the target company said in a press release on Monday.

The recommendation has also taken into account, among others, that Avangrid faces material capital investment requirements through 2030, which, on a stand-alone basis, would require Avangrid, beginning in 2025, to pursue near-term, dilutive equity issuances, capital rotations or partnerships, and/or a reduction in the Company’s current dividend, the statement says further.

The positive opinion of the proxy advisers follows an approval from the Federal Energy Regulatory Commission (FERC) obtained earlier this month.

The transaction, which concerns the remaining 18.4% stake in Avangrid that Iberdrola does not already own, was agreed upon in May. Under the buyout terms, Iberdrola will pay USD 35.75 per Avangrid share in cash. The transaction is worth USD 2.55 billion in total.

Shareholders of the target company are set to vote on the deal at a meeting on September 26.

The agreed buyout also hinges on more regulatory approvals, including from the Maine Public Utilities Commission and the New York Public Service Commission.

(USD 1 = EUR 0.899)

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