Iberdrola-Electricity North West: Power couple

It’s a move worthy of the Monopoly Man himself. After getting its hands on one British utilities company, Scottish Power (bought for $23.21 billion in 2007), Spain’s Iberdrola has now handed over $2.6 billion for Electricity North West, which delivers electricity to around five million people in the north-west of England, including the Manchester urban area as well as throughout Cheshire, Lancashire and Cumbria. The Electricity North West grid will now be operated by Scottish Power.

And just like the utilities squares on the famous Hasbro board game, which have incremental value based on the number controlled by the same player, so Iberdrola executive chairman Ignacio Galan will be hoping that this latest purchase boosts his company’s sterling earnings potential. "As a result of this acquisition, our regulated networks asset base in the UK is now valued at €14 billion,” stated the 74-year-old at the time the deal was announced.

Iberdrola’s stake in Electricity North West following the takeover is 88%, with the Spanish multinational concluding a shareholders’ agreement with a consortium of Japanese investors for the remaining 12% of the Warrington-headquartered grid-operator. Iberdrola saw off rival bids from Engie/CDPQ and TAQA, Abu Dhabi’s national power company.   

Following the capture of Electricity North West, the UK is now Iberdrola’s biggest market, with assets worth $15 billion

The markets responded quite favorably to the tie-up, echoing investor enthusiasm for its potential to expand Iberdrola’s network operations and deliver stable returns over the long term. In early December 2024, Iberdrola’s market capitalization stood at €86 billion, with a share price of €13.5. This value places it near its 52-week high of €14.26 achieved in around the time the deal closed.

In a September interview with CNBC, Galan stated that the company’s main investments in the UK going forward would be transmission-grid related. “Britain is already pushing us to invest more and more in electricity transmission… for connecting Scotland and the north of England with central and southern England and Wales. We have huge investment planned for the UK. We are talking probably about £20 to £30 billion from now to 2030, most of it dedicated to grid investment.”

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Bilbao-headquartered Iberdrola is the world’s fifth-largest utilities company, with interests in the US, UK, Europe, Australia, Japan, South America and Central America. It has annual revenue of $56.7 billion. The takeover extended Iberdrola’s UK network to over 105,000 miles. Following the capture of ENW, the UK is now its biggest market, with assets worth $15 billion held there, with the US in second place at $14 billion. Across the Atlantic, Iberdrola operates grids in Massachusetts, Connecticut and Maine, in total bringing electricity into the homes of 15 million Americans. 

The deal comes at a time when distribution networks are investing heavily in smart grids and the energy transition. In recent years the company has constructed offshore wind-power facilities in France, the UK and Tiawan.    

Iberdrola is currently in the midst of constructing a massive offshore windfarm stretching nearly 43 miles from the coast off Great Yarmouth out into the North Sea. The East Anglia Three project, as it is known, will provide enough green energy to power over one million homes, when it comes online by 2027.