By Christopher Bjork and David Román
MADRID--Spanish power utility Iberdrola SA said Thursday it has
agreed to buy U.S. power and gas distributor UIL Holdings Corp. in
a cash-and-stock deal that values the company at $3 billion.
Iberdrola, which is offering a share of its U.S. unit and $10.5
for each UIL share, said it plans to fold the New Haven,
Conn.-based firm into its local unit, Iberdrola U.S.A. UIL's power
and gas distribution network, with 727,000 customers, spans the
states of Connecticut and Massachusetts.
The bid, which has been approved by the boards of both
companies, values each share of UIL at $52.83, representing a 19.5%
premium to UIL's average share price over the past 30 days, and a
23.6% premium over its closing price Wednesday.
Once the deal has closed Iberdrola will own 81.5% of Iberdrola
U.S.A. while existing UIL shareholders will own 18.5%, Iberdrola
said.
Iberdrola said the deal would help implement its growth plans in
the U.S. through 2016, seeking to increase the company's local
footprint and a stronger focus on regulated businesses with stable
cash flows.
Iberdrola U.S.A. also has the second-largest wind power
generation portfolio in the U.S.
The Spanish company, based in the industrial northern region of
Basque Country, has expanded in Spain and the U.K. on a wind
power-friendly strategy that has taken advantage of once-hefty
subsidies for renewable energy, but suffers compressed margins
there as cash-strapped governments cut down on aid for the
sector.
Iberdrola U.S.A. already has nearly 3 million customers mostly
in New York, New Hampshire and Maine. Including energy storage, it
has more than 60 projects in 24 states, and controls Iberdrola
Energy Holdings, one of the top gas storage operators and gas
traders in the country with energy services trading floors in
Houston and Salt Lake City.
Write to Christopher Bjork at christopher.bjork@wsj.com and
David Román at david.roman@wsj.com
Anna Pérez
contributed to this article.
Corrections & Amplifications
Iberdrola is offering one share in its U.S. unit and $10.5 for
each UIL share. An earlier version of this article mistakenly said
Iberdrola was offering its own Madrid-listed shares as part of the
deal. An earlier version of the story also reported that UIL's
asset base includes wind-power. It will be the new combined entity
that will have wind power assets in its portfolio.
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