Excluding the mega deal, value and volume still increased compared to second quarter of 2012 increased interest in U.S. assets among foreign acquirers
NEW YORK, August 6, 2013 ― North American power and utilities merger & acquisition (M&A) volume and value experienced significant growth in the second quarter of 2013 compared to a year ago, according to PwC US’ quarterly deals snapshot – North American Power & Utilities Deals: Q2 2013.
There were seven power and utilities deals worth $50 million or more in the second quarter of 2013, representing $12.5 billion in total deal value, compared to two deals totaling $668 million in the second quarter of 2012. The increase in deal value was largely driven by one mega deal announced in the second quarter of 2013, which accounted for 83 percent of the total value of deals worth $50 million or more. When excluding that transaction, the total value of deals was $2.1 billion, more than double the total value of transactions in the second quarter of 2012. Average deal value also jumped sharply to $1.8 billion in the second quarter of 2013, compared to $333 million in the second quarter of 2012, as a result of the mega deal.
“Low natural gas prices, slow load growth, increasing costs, and the thirst for yield are among the factors that continue to drive M&A activity in the power and utilities space,” said Jeremy Fago, U.S. power and utilities deals leader, PwC. “In particular, divestitures continue to be prevalent in the industry. We’re seeing companies focus on their core businesses, shedding underperforming assets and/or monetizing attractive contracted assets, especially with the need for liquidity and investment capital.”
Strategic investors accounted for all deals worth $50 million or more in the second quarter of 2013.
“While financial investors weren’t as active this quarter, the power and utilities sector remains of interest to private equity players and we expect activity among this investor group to pick up in the coming quarters,” added Fago.
Foreign interest in U.S. utilities and power generation continued in the second quarter of 2013 with non-U.S. acquirers representing nearly 60 percent of deal volume worth $50 million or more.
“The U.S. offers significant opportunities for M&A to overseas buyers looking to deploy capital, specifically in the power generation and regulated utilities space,” added Rob McCeney, U.S. power and utilities deals partner, PwC.
“In this capital intensive industry, it’s critical for dealmakers to strategically think through how they can diversify and be best positioned to deal with the ongoing uncertainty in the industry. We’re focused on helping our clients think through those issues, and what additions or divestitures they can make to their portfolios to ensure they’re delivering ratepayer and shareholder value,” concluded Fago.
For more information on PwC’s Deals practice, visit www.pwc.com/us/deals.
PwC provides assurance, tax and advisory services to the power and utilities industry. Using deep industry experience, PwC helps top power and utilities companies gain operating efficiencies across the business value chain, from fiscal integrity and regulatory issues to increased customer service and talent management.
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