ALBUQUERQUE, N.M. — El Paso Electric Co., which serves 100,000 customers in New Mexico, announced a “definitive agreement” Monday with the Infrastructure Investment Fund to acquire the utility for $4.3 billion.
The Investment Fund – an $11.5 billion private investment vehicle advised by J.P. Morgan Investment Management Inc. – offered to buy EPE for $68.25 per share, representing a 17 percent premium over EPE’s closing price on May 31, the last trading day prior to announcing the agreement.
El Paso Electric, listed on the New York Stock Exchange, was trading at $66.30 per share Monday afternoon.
EPE’s Board of Directors unanimously supports the deal, which must still be approved by shareholders and regulatory authorities. If approved, the acquisition could close in early 2020.
EPE President and CEO Mary Kipp told the Journal the Investment Fund brings financial muscle, broad utility experience, and a commitment to building a clean energy grid.
IIF has agreed to keep EPE’s 1,100 employees in place, provide $21 million in electric bill credits to the utility’s 428,000 retail and wholesale customers, and establish a special fund to invest $100 million over 20 years in economic development initiatives in EPE’s service area in southern New Mexico and West Texas. The utility provides power from Las Cruces to Hatch to Holloman Air Force Base and White Sands Missile Range.
“We believe this partnership will provide a platform to grow the company and jobs while doing good things for our shareholders and the local community,” Kipp told the Journal. “IIF will stand up a $100 million fund for economic development in our region. That’s unheard of.”
IIF could also help EPE meet new clean energy mandates under New Mexico’s Energy Transition Act, which requires public utilities to derive 80 percent of their electricity from renewables by 2040.
“About 30 percent of IIF’s global investments are in the renewable space,” Kipp said. “They bring expertise that can help us get to carbon-free generation in a cost-effective manner.”
Headquartered in New York and London, IIF owns 19 companies – including 11 electric, utility and generation firms – in the U.S., Europe and Australia. It’s invested about $3 billion in renewable energy assets that together generate 3.4 gigawatts of electricity, or enough to power three million homes for a year.
After the acquisition, EPE will remain headquartered in El Paso, said Matthew LeBlanc, chief investment officer with J.P. Morgan’s Infrastructure Investment Group.
“As a long-term owner of utilities, we understand the importance of EPE’s mission and believe our resources and experience can expand EPE’s leadership as a provider of safe, clean, affordable and reliable energy,” LeBlanc said in a statement.
EPE owns four natural gas, solar and wind power plants, plus a 15.8 percent stake in the Palo Verde Nuclear Generating Station in Arizona. It serves to about 100,000 customers in New Mexico.