Iberdrola of Spain Buys UIL of New Haven for $3 Billion

Source: By DEALBOOK, New York Times • Posted: Friday, February 27, 2015

Iberdrola, a big Spanish utility company, agreed on Thursday to acquire the UIL Holdings Corporation of New Haven, Conn., for $3 billion in cash and stock as it seeks to expand in the United States.

UIL shareholders will receive one share in the new company for each share they own plus $10.50 a share in cash, for a total value of $52.75 a share. That is a 25 percent premium to UIL’s closing price on Wednesday.

Iberdrola will combine UIL’s power and gas operations with its existing local unit and will list the new company on an American stock exchange. The combined company will serve 3.1 million customers in New York, Connecticut, Massachusetts and Maine. The company said it expected to invest $6.9 billion in electric and gas infrastructure and other capital expenditures over the next five years.

Ignacio S. Galán, the chairman of Iberdrola, said in a statement that the deal was consistent with the company’s expansion strategy. Iberdrola capitalized on subsidies to renewable energy projects like wind turbines, but cutbacks in aid and sluggish markets at home have prompted it to seek growth abroad.

Long-term earnings per share for the new company are expected to grow by about 10 percent a year through 2019, according to the statement.

“Iberdrola is an ideal long-term partner for our customers, our employees and the communities we serve,” said James P. Torgerson, the chief executive of UIL, who will be the chief of the combined company after the deal closes, which is expected by the end of the year.

Lazard advised Iberdrola; Morgan Stanley served as financial adviser and Sullivan & Cromwell and Wiggin &Dana served as legal advisers to UIL.