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MarketScreener Homepage  >  Equities  >  Bolsa de Madrid  >  Iberdrola    IBE   ES0144580Y14

IBERDROLA

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Spain's Iberdrola to buy UIL Holdings for about $3 bln

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02/26/2015 | 05:35am EDT
The logo of Spanish power company Iberdrola is seen on top of Iberdrola's main office building in Madrid

(Reuters) - Spanish utility Iberdrola SA (>> Iberdrola SA) will buy UIL Holdings Corp (>> UIL Holdings Corporation) for about $3 billion to create a new listed power and gas company and expand in the United States, where it hopes to offset falling profits at home.

(Reuters) - Spanish utility Iberdrola SA (>> Iberdrola SA) will buy UIL Holdings Corp (>> UIL Holdings Corporation) for about $3 billion to create a new listed power and gas company and expand in the United States, where it hopes to offset falling profits at home.

A world leader in wind turbines, Iberdrola joins other European companies seeking to grow via acquisitions outside sluggish domestic markets. Last year, German engineer agreed to buy U.S. turbine maker Dresser-Rand (>> Dresser-Rand Group Inc.).

Iberdrola's earnings have been hit hard by Europe's economic crisis, as well as by energy reforms in Spain, where new power generation taxes and renewable cutbacks dented profits.

As a result, Chairman Ignacio Sanchez Galan has vowed to slash domestic investments and expand abroad, especially in the United States and Mexico. The company already owns Scottish Power and U.S. Energy East, bought in 2006 and 2007, before Spain's financial crisis.

JP Morgan analysts said the agreed deal, which values UIL at around 10 times forecast earnings before interest, tax, depreciation and amortization, was not cheap, but that UIL would contribute valuable growth projects and potential synergies. They have an "overweight" rating on Iberdrola's shares.

Iberdrola will combine its U.S. unit with UIL and list the new company on a U.S. exchange. The companies did not say on which exchange it would be listed.

The Spanish firm said UIL shareholders would receive one share in the new company for each share they own and an additional cash payment of $10.50 per share, or $597 million.

The proposed deal implies a total value of $52.75 per share, including the cash component, representing a 25 percent premium to UIL's closing price on Feb. 25.

Iberdrola also said the deal, which is expected to boost earnings per share and cash flow, would have a limited impact on solvency and would not require a capital increase to be funded.

Sources had told Reuters last year the group would likely fund any purchase by selling assets.

The new company will serve 3.1 million electric and gas customers across New York, Connecticut, Maine and Massachusetts and would invest $6.9 billion in electric and gas infrastructure over the next five years, the companies said.

UIL Chief Executive James Torgerson will be the new company's CEO. Iberdrola and UIL will continue to have offices in New Haven, Connecticut, Massachusetts, Maine and New York.

The deal, unanimously approved by both companies' boards, is expected to close by the end of 2015.

(Reporting by Supriya Kurane in Bengalaru and Jose Elias Rodriguez in Madrid; Editing by Julien Toyer and Mark Potter)

By Supriya Kurane and Jose Elías Rodríguez

Stocks mentioned in the article
ChangeLast1st jan.
IBERDROLA -1.31% 8.71 End-of-day quote.-5.12%
UIL HOLDINGS CORPORATION 0.00%End-of-day quote.0.00%
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Financials (EUR)
Sales 2020 38 715 M
EBIT 2020 6 460 M
Net income 2020 3 683 M
Debt 2020 39 649 M
Yield 2020 4,74%
P/E ratio 2020 15,1x
P/E ratio 2021 14,5x
EV / Sales2020 2,47x
EV / Sales2021 2,42x
Capitalization 55 998 M
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Technical analysis trends IBERDROLA
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 25
Average target price 9,94  €
Last Close Price 8,71  €
Spread / Highest target 40,4%
Spread / Average Target 14,1%
Spread / Lowest Target -19,6%
EPS Revisions
Managers
NameTitle
José Ignacio Sánchez Galán Chairman, President & Chief Executive Officer
José Sáinz Armada General Director-Finance & Resources
Fernando Lucero Batalla Head-Information Technology & Finance
Íñigo Víctor de Oriol Ibarra External Director
Samantha Catherine Barber Independent Director
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