PNM Resources, the New Mexico-based utility, has agreed to pay about $1bn in cash, stock and debt to acquire TNP Enterprises, a privately held electricity provider.

The acquisition will strengthen PNM?s position as one of the top utilities in the Southwestern US, where it will provide electricity to about 700,000 customers and gas to about 450,000 customers. The combined company will have revenues of more than $2.3bn.

TNP shareholders will receive $189m in cash and newly issued shares. In addition, PNM agreed to take on $835m of TNP debt.

Bank of America advised PNM. Goldman Sachs advised TNP.

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