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Iberdrola edges higher after energy firm agrees to sell Mexican gas power assets
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Published Apr 05, 2023 08:53AM ET
Updated Apr 05, 2023 09:08AM ET
© Reuters.
By Scott Kanowsky
Investing.com -- Shares in Iberdrola (BME:IBE) climbed on Wednesday after the Spanish energy firm agreed to sell most of its Mexican gas power plants to a government-backed trust for approximately $6 billion.
Under the terms of the transaction, Mexico Infrastructure Partners - an operation that has the financial support of the Mexican government but is run by a private asset manager - will acquire 13 combined cycle gas plants and one onshore wind farm.
Officials cited by Reuters said the agreement is set to be finalized within five months.
The deal comes as Mexican president Andrés Manuel López Obrador looks to nationalize energy production in the country. López Obrador has long called for state control of the energy sector in particular, claiming that its liberalization has led to corruption and exploitation by foreign companies.
Iberdrola has become one focus of López Obrador's criticism, with the leader accusing the group of working with his political opponents. He has compared Iberdrola's conduct in Mexico to that of Spanish conquistadors during the 16th-century conquest of Mexico.
According to Reuters, Iberdrola chief executive Ignacio Galán said he supports López Obrador's energy policy, adding that it has forced the business to "look for a situation that's good for the people of Mexico" and for its shareholders.
Analysts at Citi noted that the move will likely be positive for Iberdrola because it simultaneously reduces the company's exposure to tough Mexican governmental regulations and simplifies its corporate structure.
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