Bilbao-based green energy giant Iberdrola said on Friday it signed an agreement to acquire 88% of Warrington-based Electricity North West (ENW) in the UK for an equity value of £2.1 billion (€2.5 billion).
The deal values 100% of the company, including debt, at approximately €5 billion.
Iberdrola and a consortium of investors from Japan, led by Kansai Electric Power Co, which will retain 12% of ENW’s capital, have signed a shareholders’ agreement to collaborate on a long-term basis.
ENW had been owned by Kansai and investment fund Equitix, which both own 40% stakes, according to the company’s annual report.
ENW distributes electricity to almost five million people in the North West of England, in locations including Manchester, Lancaster and Barrow, and has approximately 60,000 km of electricity distribution networks.
“This acquisition is consistent with Iberdrola’s strategy to invest in electricity networks and in countries with a strong credit rating, such as the United Kingdom (AA credit rating),” said Iberdrola, which owns ScottishPower.
“Since the merger with ScottishPower in 2007, the UK has been one of the leading investment destinations for the company, where it has invested around £30 billion (€36 billion) in that time. ScottishPower is the only 100% green integrated utility in the UK.
“With the completion of the deal, the UK becomes Iberdrola’s leading market by regulated asset base, which is valued at approximately €14 billion, followed by the United States at €13.3 billion.”
Iberdrola executive chairman Ignacio Galán said: “This transaction reinforces our commitment to investing significantly in electricity networks, which are a critical component for supporting the electrification and decarbonization of the economy.
“The agreement is also consistent with our strategy to invest in countries that have ambitious investment plans and stable and predictable regulations.
“As a result of this acquisition, our regulated networks asset base in the UK is now valued at €14 billion. When combined with the US, these two markets now represent two-thirds of our total global regulated asset base.”
Iberdrola said that geographically, ENW is located between the two existing ScottishPower networks license areas, in central and southern Scotland and Merseyside and North Wales.
It said the acquisition accelerates Iberdrola’s commitment to grow its electricity networks business, with the company now becoming the second largest electricity network operator in the UK.
“Iberdrola will now distribute electricity to around 12 million people in the UK, across a network which will span more than 170,000 kilometers,” said the group. “In addition, Iberdrola will employ more than 8,500 people in the country.
“Iberdrola and a consortium of investors from Japan, led by Kansai, which will retain 12% of ENW’s capital, have signed a shareholders’ agreement to collaborate on a long-term basis.
“The acquisition is subject to the standard authorizations for this type of transaction.”
The merger between ScottishPower and Iberdrola in 2007 was part of the company’s long-term strategy to become a world leader in the global energy market. ScottishPower describes itself as “the only vertically integrated energy company in the market.”
As well as being a major investor in renewable energy, ScottishPower owns and operates the transmission and distribution networks in south-central Scotland and the distribution network in Merseyside, North Wales and Cheshire. It is also one of the largest energy suppliers in the country, with 4.2 million customers.
Currently, Iberdrola operates more than 111,400 km of installed power lines in the UK, with 40 onshore wind farms and two offshore wind farms in operation. Its total capacity of renewables in operation in the UK exceeds 3,000 MW, enough to power the equivalent of more than two million homes, free of emissions.
As part of its growth plans, Iberdrola is building the East Anglia Three offshore wind farm, the second largest in the world, with a total capacity of 1,400 MW.