Iberdrola, the Spanish energy giant, has secured a deal to acquire Electricity North West (ENW), a UK power grid operator, for approximately £4.5 billion, including debt. This acquisition significantly boosts Iberdrola's presence in the British market.
The Madrid-based company announced on Friday that it will acquire an 88% stake in ENW from three existing shareholders: Equitix, KDM Power, and the Chinese state-backed CNIC. The deal represents an equity value of £2.1 billion.
This transaction transforms the UK into Iberdrola's largest market in terms of regulated assets. The company already owns Scottish Power, acquired for £11 billion in 2007, which provides electricity to customers in Merseyside, North Wales, and parts of central and southern Scotland. ENW distributes electricity to almost 5 million people in North West England, including the city of Manchester.
This acquisition aligns with Iberdrola's long-term strategy to expand its grid management operations, complementing its existing portfolio of wind and solar power generation assets.
Iberdrola's executive chair, Ignacio Galán, 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."
He further emphasized that the deal is "consistent with our strategy to invest in countries that have ambitious investment plans and stable and predictable regulations".
Following the completion of the ENW acquisition, Iberdrola's regulated asset base in the UK will reach approximately £12 billion, surpassing the £11.5 billion held in the United States. Together, the UK and US will account for two-thirds of the company's global regulated assets, demonstrating its significant expansion beyond its home market in Spain.
KDM Power, a consortium led by Japan's Kansai Electric Power, will retain a 12% stake in ENW upon the deal's completion.
Iberdrola stands as one of the world's largest wind and solar power developers and network owners, with approximately 43.4GW of renewable projects operational globally. In March, the company outlined plans to allocate approximately 60% of its global investment over the next three years towards electricity grids, driven by the escalating demand for networks as wind and solar power continue to grow.
This acquisition signifies further consolidation in the UK's networks sector, following National Grid's £7.8 billion acquisition of Western Power Distribution from the US's PPL in 2021.
National Grid, alongside other network owners like Berkshire Hathaway's Northern Powergrid and CK Group's UK Power Networks, will require substantial investments in the coming years to ensure their networks can effectively handle the surge in electric vehicles, heat pumps, and renewable energy under the UK's transition towards a low-carbon energy system.
BNP and Barclays served as advisors to Iberdrola, while Jefferies advised the sellers.
