Shares of Avangrid (NYSE: AGR) rose 13% on Thursday after the electric and gas utility and renewable energy provider announced that it has received a "take private" proposal from its majority stakeholder Iberdrola, S.A.(OTC: IBDSF).
Iberdrola wants to take Avangrid private
In a press release earlier today, Avangrid announced it has received a non-binding proposal from electric utility giant Iberdrola to acquire all issued and outstanding common shares of Avangrid it doesn't already own for $34.25 in cash per share -- or a total of $2.49 billion. Iberdrola already owns around 81.6% of Avangrid's outstanding shares.
The offer values Avangrid represents a modest 6.8% premium from Avangrid's closing price yesterday.
What's next for Avangrid investors?
There's no guarantee that the offer will result in an official deal, and Avangrid's board says no official decision has been made regarding whether it will accept the offer. Avangrid's board also said an "Unaffiliated Committee" will review the proposal for potential approval (or disapproval), "as well as any other alternative proposals or other strategic alternatives that may be available to Avangrid."
The potential for Avangrid to explore other competitive offers or strategic alternatives explains why shares closed well above the proposed acquisition price today. If Avangrid's board decides to accept the deal, shareholders will simply receive $34.25 in cash for every share of Avangrid they own at the time of closing. So unless you think a better deal is on the way, or if waiting longer to sell might qualify you for lower long-term capital gains tax rates on your profits, I wouldn't blame investors for taking their money and putting it to work in any number of other promising stocks.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
