Friday, January 21

The Villarejo case brings down Iberdrola’s largest foreign purchase

The setback that Iberdrola has suffered through its subsidiary in Avangrid, in the purchase of PNM Resources in the United States, disrupts all their plans, recognizes Ángel Pérez, an analyst at Renta 4.

The New Mexico regulator rejects the acquisition of PNM Resources. The decision has weighed the consequences that the Villarejo case may have for the Spanish power company.

The operation, as the analyst recalls, involved an initial investment of 8,000 million dollars, and if it were not carried out, it would hinder one of the group’s growth paths.

However, Pérez believes that “Iberdrola has the capacity to absorb growth in other ways and achieve its long-term objectives, but there is a focus of certain risk that this does not happen in the short term,” he clarifies.

The question to be resolved is “to what extent Iberdrola can appeal this decision and what capacity it has to be able to turn this decision around on the part of the regulator, but we believe that this possibility is very limited,” they point out from Renta 4.

Iberdrola did not respond to requests for information transferred from before preparing this information.

Discounted news but new cuts are not ruled out

This news was already discounted by the market, since only the negative decision of the regulator has been confirmed despite the allegations presented by Avangrid and decarbonization plans (superior to the claims of the State of New Mexico itself).

“The news is negative, but we consider that it is largely reflected in the price after the conclusions published at the beginning of this month, when the price corrected sharply (-4.27 percent) although we do not rule out that there could be further cuts” , they affirm from Renta 4.

The experts of Bankinter also consider that this is negative news, since “Iberdrola had so far obtained all the permits to approve the operation. Among them, those of Competition, the authorization of the Committee for Foreign Investments (CFIUS), the approval of the state regulators of Texas, as well as the federal one for the energy area FERC, for nuclear safety NRC -and the telecommunications area (FCC) “.

Reputational issues are behind the failure

But what does this refusal really mean? For Bankinter, the issue behind it is that the reputational problems that have plagued the company since The Villarejo case splashed on him and their activity is taking its toll.

The five commissioners rejected the operation because it was not the best option for consumers and because several executives, including its president, Ignacio Galán, are charged with alleged illegal payments to the former commissioner.