Iberdrola, a major Spanish electricity utility, has finalised a deal to acquire a controlling stake in Electricity North West (ENW). The deal is worth £2.1bn and marks a significant expansion for Iberdrola in the UK market.
This acquisition aligns with Iberdrola’s long-term strategy. It bolsters their commitment to investing in stable markets and supporting the transition to sustainable energy.
Acquisition Details
Iberdrola, the Spanish multinational electricity utility, has signed a deal to acquire 88% of Stockport-based Electricity North West (ENW) for £2.1bn, or €2.5bn. This deal values 100% of the company, including debt, at approximately €5bn.
ENW, North West’s power network operator, recently reported a drop in profits. Increased property, plant, and equipment costs were the main reasons. Despite this, the Iberdrola acquisition aligns with their strategy to invest in electricity networks in countries with strong credit ratings like the UK.
Investment Strategy
Iberdrola’s merger with ScottishPower in 2007 marked a significant move in this direction. Since then, the company has invested around £30bn (€36bn) in the UK. ScottishPower is the only 100% green integrated utility in the UK, highlighting Iberdrola’s commitment to sustainable energy.
With this acquisition, the UK becomes Iberdrola’s leading market by regulated asset base, valued at approximately €14bn, followed closely by the US at €13.3bn.
Company Statements
Ignacio Galán, Iberdrola’s executive chairman, stated, “This transaction reinforces our commitment to investing significantly in electricity networks, which are a critical component for supporting the electrification and decarbonisation of the economy.”
Galán further added that the agreement aligns with their strategy to invest in countries with ambitious investment plans and stable regulations. Following the acquisition, two-thirds of Iberdrola’s global regulated asset base will be centered in the UK and the US.
Regional Impact
ENW serves almost five million people in the North West, including Manchester, Lancaster, and Barrow. It manages approximately 60,000 km of electricity distribution networks.
This acquisition boosts Iberdrola’s ambition to expand its electricity networks business. The company will now become the second-largest electricity network operator in the UK. Electricity will be distributed to around 12 million people across a network spanning more than 170,000 km.
Furthermore, the acquisition means Iberdrola will employ over 8,500 people in the UK.
Partnerships and Agreements
Iberdrola and a consortium of Japanese investors, led by Kansai, which will retain 12% of ENW’s capital, have agreed to collaborate long-term.
The acquisition still requires standard authorisations for such transactions.
Historical Context
The 2007 merger between ScottishPower and Iberdrola was part of the latter’s long-term strategy to become a world leader in the global energy market.
ScottishPower operates various networks in south central Scotland, Merseyside, North Wales, and Cheshire. It also has 4.2 million customers, making it one of the largest energy suppliers in the UK.
Currently, Iberdrola operates over 111,400 km of power lines in the UK. Their renewable energy capacity exceeds 3,000 MW, enough to power more than two million homes emission-free.
Future Prospects
As part of its growth strategy, Iberdrola is constructing the East Anglia Three offshore wind farm, the world’s second-largest, with a total capacity of 1,400 MW.
Electricity North West Response
Electricity North West declined to comment on the acquisition when contacted for a statement.
The acquisition of Electricity North West by Iberdrola signifies a strategic investment in the UK’s electricity infrastructure.
It also highlights Iberdrola’s dedication to sustainable growth and commitment to the electrification and decarbonisation of the economy.