In late April 2019, Ms. Collawn and Mr. Eldred and a
representative of Evercore met with Mr. Azagra Blazquez in San
Diego, California. Mr. Azagra Blazquez expressed interest in
engaging in discussions with PNMR about a possible strategic merger
On May 21, 2019, the PNMR board met at a regularly scheduled
meeting and, in executive session with Mr. Eldred and PNMR’s
General Counsel participating, reviewed materials prepared by
Evercore and provided in advance of the meeting. The materials
described the high level conversations that had been held since the
February 2019 PNMR board meeting with Mr. Azagra Blazquez and
his team, and the three other possible strategic partners which had
been contacted (which are referred to as Company A, Company B and
Company C). The materials provided information about each of these
companies and their possible rationale for considering a
transaction with PNMR. The General Counsel reviewed the PNMR
board’s fiduciary duties when considering significant strategic
matters. Following discussion, the PNMR board authorized management
to work with Evercore and outside counsel to seek to execute
non-disclosure agreements (NDA) with the contacted companies and
then provide them with non-public information. The terms of all of
the NDAs permitted the counterparty to make non-public proposals to
the PNMR board following public announcement that PNMR had entered
into a merger agreement. The PNMR board directed that the contacted
companies should be invited to provide indications of interest for
a transaction, which would be reviewed by the PNMR board to
determine whether it desired to continue with the process. In this
discussion, the PNMR board focused on its desire to obtain a fair
value for shareholders, while also emphasizing the importance of a
strategic merger partner’s ability to enhance the company’s pursuit
of its strategic direction. The PNMR board also discussed the
importance of employee considerations.
In late May 2019, Company A informed representatives of Evercore
that it was not interested in pursuing a transaction with PNMR due
to leverage and balance sheet considerations as well as timing not
being conducive for Company A to consider a transaction.
On June 3, 2019, El Paso Electric entered into an agreement to
be acquired by Infrastructure Investments Fund, an investment
vehicle advised by J.P. Morgan Investment Inc. Between May 31 and
June 20, 2019, the trading price of PNMR common stock
increased by 10.0% from $47.11 to $51.83.
On June 5, 2019, PNMR and Iberdrola entered into an NDA.
In early June 2019, Mr. Eldred met with Company B during an
industry conference in Philadelphia, Pennsylvania. Additionally
during this industry conference, Ms. Collawn and
Mr. Eldred met with Mr. Azagra Blazquez.
Also in early June, PNMR and Company C entered into an NDA, and in
mid-June, PNMR and Company B entered into an NDA.
In late June 2019, Company C informed representatives of Evercore
that it was not interested in pursuing a transaction at that time.
Company C explained that its reasons for not pursuing a transaction
included PNMR’s high stock market valuation and concerns about
Company C’s leverage level and ability to fund a transaction.
In late June 2019, Company B provided Evercore with a list of
certain preliminary due diligence questions on the PNMR financial
information. Evercore thereafter provided Company B with PNMR’s
responses to these questions.
On July 2, 2019, at the direction of PNMR, Evercore sent an
initial bid instruction letter to Company B and Iberdrola which
required that preliminary indications of interest be submitted by
July 18, 2019.
On July 16, 2019, Company B informed Evercore that it was not
interested in pursuing a transaction with PNMR at that time.
Company B explained that its reasons for not pursuing a transaction
included PNMR’s high stock market valuation, PNMR’s leverage level,
the New Mexico regulatory climate and PNMR’s small size.
On July 17, 2019, Evercore was provided with materials related
to a potential strategic merger transaction of PNMR and
On July 22, 2019, the PNMR board met at a regularly scheduled
meeting and in executive session, with Mr. Eldred and PNMR’s
General Counsel participating, reviewed the status of discussions
with the possible strategic partners and reviewed information about
Iberdrola and Avangrid. On July 23, 2019, the PNMR board