Monday, January 24

Iberdrola: two opposing views on the Tandem case


Iberdrola is experiencing a week of bad news that shows that the markets, despite global phenomena such as the omicron variant that sometimes take over all of them, are moving with a particular idiosyncrasy that does understand borders.

While in the USA the Spanish subsidiary of Iberdrola, Avangrid, fell by 2.81 percent after knowing the majority opposition of the regulators to a merger of this with the local company PNM Resources; on Spain, the energy company moves laterally after knowing the date chosen for Ignacio Sánchez Galán declare as investigated by the case ‘Tandem’.

In case of the alleged hiring of former commissioner Villarejo that splashes members of the board of Iberdrola add more fuel to the fire of your reputation in North America, but in the Spanish market it has been received with a simple: circulate, there is nothing to see here.

Iberdrola’s bad reputation in the US

The New Mexico Public Regulation Commission, the entity in charge of overseeing utility, transportation and supply companies in the southwestern US state, expressed on Thursday the rejection of three of its five members of the agreement that Iberdrola’s American subsidiary, Avangrid, had reached with the local energy conglomerate PNM Resources.

The disagreement with this merger that Iberdrola valued in 2020 at 8.300 million dollars was justified because, in the eyes of US regulators, the subsidiary of the Spanish company “has a horrible record in handling public services” in the USA.

PNM Resources CEO and President Pat Vincent-Collawn, claimed to be “disappointed” before a debate produced in the American commission that in their eyes “did not propose a more balanced perspective of the proposed transaction, presenting an incomplete photograph”, while affirming that they will continue to fight for its approval.

The sample of adherence by the regulators to the rejection report issued by the commissioner Ashley Schannauer last November does not mean that the merger has been officially vetoed, that will only happen when there is a formal vote on the operation.

In what did translate the unfavorable position of the US public entity to this operation was in losses of 2.81 percent in Avangrid, and 6.31 in PNM Resources.

Justice sets a date for Sánchez Galán’s testimony

The refusal of the New Mexico Commission a the merger of Avangrid with PNM Resources further reinforces the view expressed in Schannauer’s 445-page report that Iberdrola and its affiliate “had withheld information about their problems” in other parts of the world.

And the problems of the Spanish company in another part of the world came to the fore again when it became known that the president of the energy company, Ignacio Sánchez Galán, will appear before the judge on January 18 to testify for the alleged espionage to the president of ACS, Florentino Pérez.

Prince he will have to face justice after being charged for his alleged participation in the espionage plot woven around former commissioner Villarejo, but the market has not reacted.

Despite the fact that at the time of his imputation analysts did downgrade their recommendation on Iberdrola from ‘buy’ to ‘neutral’ and lowered their target price from 13 euros to 11.70 euros per share, the market seems to have discounted this threat to the good governance of the company, and has remained unchanged after the announcement of the subpoena by part of the reinforcement judge of the National audience, Joaquín Gadea.

The actions of Iberdrola During the session on Friday, in fact, they rose 0.66 percent, placing their price at 9.69 euros per share.

Life goes on for the company

Apart from the judicial and bureaucratic blows Iberdrola faces, the company has continued to advance in its daily operations and, in fact, has issued two important announcements both on Thursday and Friday.

The first is the agreement reached with the Swedish company H2 Green Steel to build a green hydrogen plant with 1,000 MW of installed capacity that will involve an estimated investment of 2,300 million euros and whose start of production is expected in 2025 or 2026, from agreement to the statement of the Spanish company.

The second is that Iberdrola, through its subsidiary Scottish Power Overseas, has closed the sale of its gas storage business, in an operation that falls within the non-strategic asset rotation framework of its 2020-2025 strategic plan.



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