Iberdrola to buy rest of US power firm Avangrid in $2.6 billion deal

By David French

NEW YORK (Reuters) -Spanish utility Iberdrola has agreed to acquire the remaining 18.4% stake in Avangrid that it does not already own, the U.S. subsidiary said on Friday, in an all-cash deal worth about $2.6 billion.

The agreement would come after Avangrid abandoned in January an $8.3 billion deal to acquire U.S. competitor PNM Resources because it failed to secure approval from New Mexico's utility regulator more than three years after first announcing the plan.

Iberdrola will pay $35.75 per share for the outstanding Avangrid stock, with the transaction expected to close in the fourth quarter, Avangrid said in its statement.

The news confirmed a Reuters story earlier on Friday which said Iberdrola and Avangrid were in advanced talks for a transaction at that price, which cited people familiar with the matter who spoke on condition of anonymity.

The deal price is below the $37.53 level at which the stock ended trading on Thursday. Avangrid's stock dropped 4.7% to $35.78 when it restarted trading on Friday afternoon.

However, it is a small increase on the $34.25 per share which Iberdrola said in March it would offer to buy out Avangrid, and an 11.4% premium to Avangrid's share price the day before Iberdrola's offer was made.

Iberdrola, one of Europe's largest power companies, said in an earlier statement on Friday the deal would increase its exposure to its U.S. business, which it is seeking to grow.

Avangrid operates renewable power assets in 24 states, and also serves 3.3 million customers in New York and New England through regulated utility operations, per its website.

It began trading as an independent company in December 2015, following the merger of Iberdrola USA and UIL Holdings Corporation.

Iberdrola said in March it plans to invest 41 billion euros ($44.57 billion) over the next three years, with a focus on upgrading and expanding power grids in the United States.

($1 = 0.9199 euros)

(Reporting by David French in New York Editing by Greg Roumeliotis and Chizu Nomiyama)