KKR & Co. is in the process of considering an acquisition of TXNM Energy Inc., which operates New Mexico's largest utility, according to sources familiar with the situation.
KKR has been engaged in discussions about a potential takeover with TXNM in recent weeks, as reported by insiders wishing to remain anonymous due to the confidential nature of the matter. TXNM has been evaluating a possible sale after attracting interest from potential buyers, according to a recent report by Bloomberg News.
Representatives for both KKR and TXNM have chosen not to provide comments at this time.
TXNM's stock price decreased by 0.7% to $52.47 during trading in New York on Tuesday at 12:43 p.m., giving the company a market capitalization of around $4.9 billion. Over the past year, the stock has seen a 42% increase.
The discussions coincide with a period where U.S. utility companies stand to benefit from increased power consumption driven by factors such as data centers, new manufacturing facilities, and the transition to electric buildings and vehicles. This trend has spurred heightened merger and acquisition activities, exemplified by Constellation Energy Corp.'s agreement in January to purchase Calpine Corp. for $16.4 billion.
It is underscored that no final decision has been reached, and KKR may decide against pursuing the acquisition while TXNM could potentially entertain offers from other buyers or remain independent, as indicated by sources familiar with the matter.
KKR, a major player in alternative asset management globally, has a significant track record in the power sector, with notable involvement in the $45 billion acquisition of TXU in 2007, one of the largest leveraged buyouts in history. Earlier this year, KKR, in partnership with Canada's PSP Investments, agreed to acquire a minority stake in American Electric Power Co.'s transmission business for $2.8 billion.
Formerly known as PNM Resources Inc., TXNM operates two utilities catering to over 800,000 residences and businesses in New Mexico and Texas.
In 2020, TXNM had entered into an agreement to be acquired by Avangrid Inc., a U.S. subsidiary of Spain's Iberdrola SA, for $4.3 billion. However, the deal fell through after regulators in New Mexico rejected the acquisition.
--Assistance provided by Mark Chediak and Michelle F. Davis.