Iberdrola, the Spain-based global utility company that plans to acquire New York State Electric & Gas parent Energy East, on Wednesday stressed the benefits of the $4.5 billion deal for various stakeholders, including consumers, workers and New York.
Cost-cutting to reap huge profits on the deal is not the focus of Iberdrola's plan, said Pedro Azagra, the company's director of corporate development, in a meeting with the Press & Sun-Bulletin.
Instead, Iberdrola's goal is to invest and expand in New York, using the acquisition as an entry into the U.S. market, as opposed to a "transforming transaction" for the company, he said.
"We have committed to not firing anyone because of the transaction," Azagra said. He noted that Iberdrola likes to keep local people running local operations.
Azagra added that the company also has raised equity to pay for the shares of Energy East, instead of incurring the debt that can be used to fund acquisitions and mergers.
In addition, Iberdrola's plans include launching renewable energy projects, including wind power, in the "areas of worst economic development" in New York. Azagra noted that as the state continues to lose population and businesses, and works to attract investment, the projects could serve as a valuable tool for New York's use in marketing the area for additional economic development. But it will be up to the state and communities to approve the projects.
Service quality will remain high and the company's best practices implemented, though some things, such as utility rates, remain largely out of the company's control, Azagra said.
"We bring enthusiasm. We like to invest," he said. "We are a very dynamic company that does many things."
The acquisition is expected to close in the first half of this year, pending receipt of remaining regulatory approvals and other customary closing conditions.
Energy East shareholders overwhelmingly approved the deal in November. Energy East's utility subsidiaries would retain their names.
"We think we are paying a fair price" to gain a safe means of entry in the market that could lead to other expansion opportunities in the United States, Azagra said.
Energy East serves about 3 million customers in upstate New York and New England.
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