Iberdrola acquires majority stake in ENW for €5bn

October 2024 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

October 2024 Issue

In a transaction that enhances its commitment to the UK market, Spanish multinational electric utility company Iberdrola is to acquire an 88 percent stake in Electricity North West (ENW) in the UK for approximately €5bn, including debt.

The acquisition of ENW aligns with Iberdrola’s strategy to invest in electricity networks in countries with strong credit ratings, such as the UK, which holds an AA credit rating. ENW serves nearly 5 million people in the North West of England, including Manchester, Lancaster and Barrow, through approximately 60,000km of electricity distribution networks.

The transaction also fits with Iberdrola’s growing focus on the UK and the US, which, according to Ignacio Galán, executive chairman of Iberdrola, offer some of the best returns for network businesses.

With capital to deploy after selling some assets in Mexico and scrapping the planned purchase of US energy firm PNM Resources, the deal to acquire ENW helps Iberdrola connect areas it already serves through its Scottish Power business.

Merging with ScottishPower in 2007 and having invested around €36bn to date has made the UK a significant investment destination for Iberdrola. As a major investor in renewable energy, ScottishPower operates extensive transmission and distribution networks and serves 4.2 million customers in the UK. It is the UK’s only 100 percent green integrated utility.

Moreover, with the acquisition of ENW, the UK becomes Iberdrola’s leading market by regulated asset base, now valued at approximately €14bn, surpassing the US at €13.3bn. The acquisition also positions Iberdrola as the second-largest electricity network operator in the UK, distributing electricity to around 12 million people across more than 170,000km of network and employing over 8500 people.

Headquartered in Bilbao and with more than 180 years of history, Iberdrola is today a global energy leader, the leading wind power producer and one of the largest electricity companies in the world in terms of stock market capitalisation. The company has been committed to clean energy for more than 20 years, with the objective of exceeding 52,000MW of renewable capacity by 2025.

“This transaction reinforces our commitment to investing significantly in electricity networks, which are critical for supporting the electrification and decarbonisation of the economy,” said Ignacio Galán, executive chairman of Iberdrola. “The agreement aligns with our strategy to invest in countries with ambitious investment plans and stable regulations. Our regulated networks asset base in the UK now stands at €14bn, making the UK and the US two-thirds of our total global regulated asset base.”

In addition, Iberdrola has entered a shareholders’ agreement with a consortium of Japanese investors led by Kansai, which will retain a 12 percent stake in ENW, ensuring long-term collaboration.

This acquisition of ENW is subject to standard regulatory approvals.

Iberdrola’s UK operations include over 111,400km of power lines, 40 onshore wind farms and two offshore wind farms, with a total renewable capacity exceeding 300MW– enough to power over 2 million homes emissions-free. The company is also constructing the East Anglia Three offshore wind farm, the world’s second-largest, with a capacity of 1400MW.

Fraser Tennant