What Does FERC Approval Mean for the TXNM Energy-Blackstone Deal

Key Takeaways

• TXNM Energy's $11.5 billion acquisition by Blackstone Infrastructure cleared a major federal hurdle with FERC approval, significantly de-risking the deal.
• The transaction, priced at $61.25 per share in cash, now hinges on final state-level approval from the New Mexico Public Regulation Commission (NMPRC) and the Nuclear Regulatory Commission.
• Despite concerns over private equity control and potential ratepayer impact, the deal promises substantial customer benefits and long-term capital for clean energy transition.

What Does FERC Approval Mean for the TXNM Energy-Blackstone Deal?

The Federal Energy Regulatory Commission (FERC) has given its stamp of approval to Blackstone Infrastructure's $11.5 billion acquisition of TXNM Energy (NYSE: TXNM), marking a critical milestone for the long-awaited merger. This federal green light, announced on February 20, 2026, signals that the transaction is "consistent with the public interest," effectively dismissing concerns that had centered on private equity control and Blackstone's extensive data center holdings. For TXNM shareholders and the broader utility sector, this decision significantly de-risks the deal's path forward, removing a major regulatory obstacle that many had watched closely.

FERC’s ruling was particularly notable for its direct rebuttal of opposition arguments. Critics had voiced apprehension that Blackstone's substantial ownership in data centers, which are massive electricity consumers, could create conflicts of interest or lead to adverse effects on consumer rates. However, the commission found "no evidence" that the deal would impair state or federal regulation, harm competition, or result in higher costs for customers. This finding was bolstered by the "ring-fencing" protections already committed to in New Mexico and Texas, designed to shield the utility’s operations from potential risks associated with its parent company.

This federal clearance follows a series of other crucial approvals, including the Federal Communications Commission (FCC) and the expiration of the Hart-Scott-Rodino antitrust waiting period. More recently, the Public Utility Commission of Texas (PUCT) also approved a unanimous settlement for the acquisition earlier in February 2026, covering TXNM's Texas-New Mexico Power Company (TNMP) subsidiary. With these federal and Texas-level hurdles now cleared, the focus shifts squarely to the remaining state-level proceedings in New Mexico, which historically has proven to be a more challenging regulatory environment for utility mergers.

The market reaction to the FERC news was relatively muted, with TXNM shares trading at $59.05 as of February 20, 2026, just slightly up from its previous close. This suggests that while the approval is positive, much of the market confidence in the deal's completion has already been priced in, given the stock has traded near the $61.25 offer price since the deal's announcement in May 2025. Investors are now keenly awaiting the final regulatory decisions, particularly from the New Mexico Public Regulation Commission (NMPRC), which remains the primary outstanding hurdle.

What Are the Key Terms and Regulatory Journey So Far?

The acquisition, first announced on May 19, 2025, sees Blackstone Infrastructure acquiring TXNM Energy for $61.25 per share in cash. This represents a substantial 23.0% premium to TXNM Energy’s unaffected 30-day volume weighted average price as of March 5, 2025, the day prior to initial reports of a developing acquisition. The total enterprise value of the transaction is approximately $11.5 billion, which includes the assumption of TXNM’s net debt and preferred stock. For TXNM shareholders, this cash offer provides a clear exit strategy and a significant premium over the company's trading range prior to the deal news.

The regulatory journey for this deal has been extensive and multi-faceted, reflecting the complex nature of utility acquisitions. Beyond the recent FERC approval, several other critical clearances have already been secured. Shareholders overwhelmingly approved the merger in August 2025, demonstrating strong internal support for the transaction. The Hart-Scott-Rodino antitrust waiting period expired without issue, and the Federal Communications Commission (FCC) also granted its necessary approval. These early clearances laid a solid foundation for the subsequent, more scrutinized regulatory reviews.

A significant step was the approval from the Public Utility Commission of Texas (PUCT) in February 2026. This came after a unanimous settlement was reached in December 2025 between Texas-New Mexico Power Company (TNMP), Blackstone Infrastructure, and various intervenors. The Texas settlement included a comprehensive package of customer protections, such as $45.5 million in rate credits distributed to TNMP customers over 48 months, and a commitment that no acquisition-related costs would be passed through to customer rates. These provisions were crucial in addressing concerns about potential negative impacts on ratepayers.

Furthermore, the Texas agreement stipulated workforce protections, preventing involuntary employee reductions for at least three years, and a commitment to fully fund TNMP's five-year capital expenditure plan through 2029. Dividend restrictions, subject to credit rating and financial health requirements, were also put in place, alongside a pledge to maintain local headquarters in Texas. These detailed commitments highlight the comprehensive nature of the regulatory negotiations and the efforts made by Blackstone and TXNM to secure approvals by addressing stakeholder concerns directly.

What Remaining Hurdles Could Impact the Deal's Close?

Despite the significant progress, two key regulatory approvals remain before the TXNM Energy-Blackstone deal can officially close. The most prominent and historically challenging hurdle is the New Mexico Public Regulation Commission (NMPRC) approval, which pertains to TXNM’s Public Service Company of New Mexico (PNM) segment. The NMPRC has a reputation for rigorous scrutiny of utility mergers, and its decision is not bound by a specific statutory timeframe, though PNM has estimated the process to last about a year from its application filing date of August 25, 2025.

The NMPRC process involves extensive public hearings, intervenor testimonies, and a detailed review of the proposed benefits and potential drawbacks for New Mexico ratepayers and communities. Public comment hearings were scheduled for February 5 and February 17, 2026, with a prehearing conference set for April 28, 2026, and the main hearing scheduled from May 4 to May 15, 2026. This timeline indicates that a final decision from the NMPRC is still several months away, likely in the second half of 2026, aligning with the initial estimated closing timeframe for the overall transaction.

The second remaining approval is from the Nuclear Regulatory Commission (NRC). This is required to authorize the transfer of PNM's stake in the Palo Verde nuclear generating station. While typically less contentious than state utility commission reviews, NRC approval is a mandatory federal step that must be completed. The NRC’s review focuses on ensuring that the ownership transfer does not compromise the safety, security, or operational integrity of the nuclear facility.

The NMPRC, in particular, has been a tougher arena for utility mergers, as evidenced by past proceedings. The commission will weigh the proposed customer benefits, which include a $105 million residential rate credit over four years (reducing the average residential bill by 3.5%), $10 million for the PNM Good Neighbor Fund over ten years, $35 million for economic development and workforce training, and $25 million for clean technology investments. However, critics argue that these benefits, while substantial, might be temporary or insufficient to offset long-term risks associated with private equity ownership. The NMPRC’s ultimate decision will hinge on its assessment of whether these benefits truly serve the public interest in New Mexico.

What's the Bull Case for Blackstone's Acquisition?

The bull case for Blackstone's acquisition of TXNM Energy is multifaceted, centering on the strategic value of regulated utilities, the long-term capital infusion, and the alignment with critical energy transition goals. For Blackstone Infrastructure, TXNM represents a stable, essential asset with predictable cash flows, a hallmark of regulated utilities. The company serves over 800,000 customers across the Southwest through its PNM and TNMP segments, providing a robust platform for long-term investment.

Blackstone's investment thesis is rooted in the projected growth of U.S. electricity demand, which is expected to increase over 40% cumulatively in the next decade—the fastest pace since the 1970s. A significant driver of this demand is the booming data center industry, where Blackstone already manages $85 billion worth of assets globally. Acquiring a utility like TXNM provides a direct pathway to power these energy-intensive operations, creating a vertically integrated strategy that benefits from the "megatrend" of data center expansion. This allows Blackstone to capitalize on both the supply and demand sides of the energy equation.

Furthermore, the acquisition provides TXNM with the financial resources necessary to thrive in a rapidly changing energy environment. PNM, in particular, is committed to New Mexico’s clean energy goals, aiming for emissions-free operations by 2040. Blackstone Infrastructure offers "long-term, patient capital" that can support the significant investments required to modernize the grid, integrate renewable energy sources, and build out necessary infrastructure without the short-term profit pressures often associated with publicly traded companies. This commitment to funding TXNM's capital expenditure plans, including a $7.8 billion investment in infrastructure, is a key benefit.

The deal also emphasizes maintaining local presence and leadership, with TXNM, PNM, and TNMP remaining independently operated with headquarters in New Mexico and Texas. The current management team is expected to continue leading the companies, ensuring continuity and local accountability. This aspect, coupled with the substantial customer benefit packages negotiated in both Texas and New Mexico, aims to demonstrate that the acquisition is not merely a financial play but a long-term partnership designed to benefit customers, employees, and communities while supporting the transition to a cleaner energy future.

What Are the Risks and Concerns Raised by Critics?

While the FERC approval is a significant win for the deal, the acquisition has faced considerable opposition, primarily from consumer advocacy groups and environmental organizations. The core of the bear case revolves around concerns regarding private equity ownership of public utilities, potential impacts on ratepayers, and the broader implications of Blackstone's extensive data center holdings. Critics argue that private equity firms, driven by profit maximization, may prioritize investor returns over public interest, potentially leading to higher rates or reduced service quality.

One major concern raised by intervenors, including the Public Education Stakeholder Partnership (PESP) and Public Citizen, is the potential for "double leverage." This tactic involves private equity firms placing debt on acquired companies while contributing less equity, thereby amplifying returns for investors but potentially risking financial strain at the portfolio company. This could leave TXNM's subsidiaries, PNM and TNMP, responsible for servicing higher debt loads, which critics fear could eventually translate into pressure for rate increases on customers.

Another significant point of contention is Blackstone's dual role as both a utility owner and a major investor in data centers. Opponents, including members of the U.S. Senate Banking Committee, have highlighted the potential conflict of interest. They argue that owning both the utilities that supply power and the data centers that consume vast amounts of it could incentivize Blackstone to prioritize its data center interests, potentially leading to inflated consumer rates or preferential treatment for its own energy-intensive operations. Although FERC dismissed these concerns, the underlying tension remains a point of scrutiny.

Furthermore, while the proposed customer benefits, such as rate credits and community funds, are substantial, critics argue they might be temporary. For instance, the $105 million New Mexico rate credit, while significant, translates to about $4 per customer per month over four years. Opponents worry that these small gains could be quickly eroded if Blackstone and TXNM file a rate case asking for increases once the initial benefit period expires. The long-term impact on rates and the stability of these benefits will be a key focus for the NMPRC and other stakeholders.

What Does This Mean for Investors and What's Next?

For investors holding TXNM shares, the FERC approval significantly reduces the regulatory risk associated with the $11.5 billion acquisition by Blackstone Infrastructure. With the stock trading at $59.05 as of February 20, 2026, there's still an arbitrage spread of approximately $2.20 per share from the $61.25 cash offer price. This spread reflects the remaining uncertainty, primarily the New Mexico Public Regulation Commission (NMPRC) approval and the Nuclear Regulatory Commission (NRC) transfer authorization.

The relatively tight spread indicates that the market has a high degree of confidence in the deal eventually closing, despite the NMPRC's historical scrutiny. The current price of $59.05 is also near the stock's 52-week high of $59.52, suggesting that the market is pricing in a near-certain completion. For arbitrageurs, the remaining risk lies in the NMPRC's final decision, which could still delay or, in a worst-case scenario, derail the transaction. If the merger fails to close by the End Date (with extensions possible through December 31, 2026), either party may terminate, with specific termination fees in place: Blackstone would owe TXNM $350 million if regulatory issues cause the collapse, while TXNM would owe Blackstone $210 million if its board changes its recommendation or accepts a superior proposal.

Looking ahead, all eyes will be on the NMPRC proceedings. The upcoming hearing from May 4 to May 15, 2026, will be crucial in shaping the commission's final decision. Investors should monitor any developments from these hearings, as well as the progress of the NRC approval. While the deal has cleared most major hurdles, the NMPRC’s decision remains the final, most substantial test of whether Blackstone can successfully integrate TXNM into its infrastructure portfolio.

The FERC approval is a major step forward, but the journey isn't over. Investors should carefully weigh the remaining arbitrage opportunity against the lingering regulatory risks, particularly the NMPRC's unpredictable timeline and potential for further conditions. The coming months will be decisive for TXNM shareholders awaiting their $61.25 per share payout.

---

Want deeper research on any stock? Try Kavout Pro for AI-powered analysis, smart signals, and more. Already a member? Add credits to run more research.