Under the terms of the agreement, UIL shareholders will receive a total value of $52.75 for each share they own. This includes $10.50 a share in cash, and nearly a 25% premium to the closing price of UIL shares.
Iberdrola chairman of Ignacio Galán said: "The transaction integrates Iberdrola USA and UIL, is consistent with Group strategy and creates a significant company in the United States, a key market in which we are taking a major step forward. It also reflects our preference for effecting friendly corporate transactions."
The new company intends to invest $6.9bn over next five years in the regulated electric and gas infrastructure and other capital expenditures in order to maintain reliability and customer service.
With a rate base of approximately $8.3bn, the combined entity is expected to serve more than three million electric and gas customers across New York, Connecticut, Maine and Massachusetts.
It will have a 6.5GW portfolio primarily of renewables, and a total pipeline of over 6GW.
UIL president and CEO Torgerson said: "The combination will be immediately accretive to UIL’s cash flow profile and includes a $10.50 cash payment for each share currently owned.
"Shareholders will also participate in the future upside prospects of the combined company, enabled by leveraging its balance sheet strength to pursue additional investment opportunities in the Northeast and across the US, such as its highly attractive renewable energy development portfolio."
The transaction is scheduled to be completed by the end of 2015.
Image: The new company plans to invest $6.9bn in the regulated electric and gas infrastructure. Photo: courtesy of Iberdrola, S.A.
