China & It's Deal Appetite

December 12, 2012 11:35 by Bill Conway in Capital Markets, Economy, Financing, M&A  //  Tags: , ,   //   Comments (0)
The combination of access to capital and global opportunities is going to be fun to watch as China companies, funds and investors target US entities. Many foreign companies are willing to consider Chinese partners, but the fact that four-fifths of the Chinese acquirers are state-owned enterprises, may prove challenging in getting deals done. Dealmakers suggest China companies pursue minority interests as a means of satisfying their buying urge. [More]

PwC Predicts Increased M&A Activity in 2013

December 7, 2012 15:08 by Stephanie Siders in Capital Markets, M&A  //  Tags:   //   Comments (0)
PwC attributes its bullish 2013 U.S. M&A forecast to increased corporate confidence, greater private equity activity and strong debt markets.  Middle market transactions are expected to make up a majority of deal volume in 2013, much like 2012.  PwC expects significant opportunity in the Oil & Gas, Financial, Healthcare and Technology sectors.  To read more, click here.    

Lakeside Energy Agrees to Acquire Two Combined-Cycle Power Plants from WPS Empire State

November 5, 2012 15:29 by Bill Conway in Cooperatives, Energy, M&A  //  Tags: ,   //   Comments (0)
Lakeside Energy LLC, an owner and operator of power generation facilities in North America, has agreed to acquire two combined-cycle power plants from WPS Empire State, a subsidiary of Integrys Energy Services, Inc. The plants are located in Solvay and Beaver Falls, New York and sell energy and capacity into the New York market.  To read the full press release, click here.    

Utility Market - September 7, 2012 Dashboard

September 7, 2012 16:04 by David Patterson in Economy, Financing, M&A  //  Tags: ,   //   Comments (0)
The following is the Utility Market Dashboard for September 7, 2012.

NRG Energy, Inc. Signed a $1.7 Billion Definitive Agreement to Acquire GenOn Energy, Inc.

August 27, 2012 16:09 by David Patterson in M&A  //  Tags: ,   //   Comments (0)
NRG Energy, Inc. ("NRG") signed a definitive agreement to acquire GenOn Energy, Inc. ("GenOn") on July 22, 2012.  According to the transaction, GenOn shareholders will receive 0.1216 of a share of NRG common stock in exchange for each GenOn share of common stock.  This represents a 20.6% premium to GenOn's shareholders over the July 20 closing share price. According to Capital IQ, the implied trailing twelve month EBITDA multiple for the transaction is 5.8x.  For additional information, please read more.

Utility Market

August 10, 2012 17:18 by David Patterson in M&A  //  Tags: ,   //   Comments (0)
The Dow Jones Utility Average (“DJU”) had its ups and downs during the last 5 weeks, closing at 485.14 on August 10, 2012, up 1.4% over the July 6, 2012 close of 478.43.  At one point the DJU made a run at 500, reaching an intraday high of 498.84.  The 50 and 200 day moving averages continued their upward climb. All the DJU components reported their latest quarterly results during the last few weeks.  In summary, the cumulative revenue, EBITDA, and net income declined slightly for the group while the stock price and enterprise value increased.  This resulted in an expansion of the revenue multiple, EBITDA multiple, and the PE multiple.  The most significant change was the median EBITDA multiple increased from 8.4x to 9.2x. Dividend yield moves inversely to stock price.  As the stocks increase in value, the dividend yield declined.  

Opportunity for Coop Expansion?

August 6, 2012 10:41 by Bill Conway in Cooperatives, M&A  //  Tags: ,   //   Comments (0)
If the PwC report is correct regarding accelerated consolidation in the utility industry, the electric coop network could follow suit  by acquiring the “more rural” territories from IOUs.  This strategy makes sense for both coops and IOUs, as these rural areas are often best served by coops and fit the profile of the traditional coop service territory.  However, the economic and regulatory climates and gas prices are major factors in creating a “win / win” transaction for all parties.  More...  

Private Equity Deal Flow

August 1, 2012 16:06 by David Patterson in M&A  //  Tags:   //   Comments (0)
David Patterson | May 24, 2012 Private equity merger and acquisition (“M&A”) activity slowed down in the first quarter 2012.  There were 321 deals completed in the first quarter 2012 compared to 426 in the fourth quarter 2011 – a 25% decline.  Deal value also dropped from $89 billion to $55 billion – a 38% down turn. As the graph below indicates, deal flow continues to be well below the levels seen before the Great Recession.  The first quarter 2012 completed deals nearly tied the recent low at 318 in the third quarter 2009.     Source:  Pitchbook, Merrill Datasite        

Wisconsin Power and Light Company exercises option to purchase Riverside Energy Center

August 1, 2012 15:57 by David Patterson in M&A  //  Tags: ,   //   Comments (0)
Wisconsin Power and Light (“WPL”) Press Release | May 18, 2012 WPL exercised its option to purchase the Riverside Energy Center from Calpine.  Riverside Energy Center is a 600MW combined cycle natural gas-fired electric generating facility, which began operation in 2004.  The announced purchase price is $392 million or approximately $653 / Kw.  Read more…

2011 Merger and Acquisition activity in the Electric, Gas, Water & Sanitary Services

July 23, 2012 12:29 by Capital Advisors in M&A  //  Tags: ,   //   Comments (0)
David Patterson | April 26, 2012 The total number of utility deals returned to a more normal level of 204 announcements in 2011, up from a low of 135 in 2009 (see Graph 1).  However, the 2011 total value of the deals, $22.9 billion, and the 2011 average value per deal, $112.3 million, have not returned to the pre-Great Recession levels (see Graph 2 and 3). Total deal values in 2011 did not return to pre-Great Recession levels for several reasons.  The market multiples continued to be “soft,” and confidence levels are still relatively low.  The Price to Earnings (“P/E”) multiple was in excess of 20 through 2009, but hovered around 15 times earnings in 2011.  The Earnings before Income Taxes, Depreciation and Amortization (“EBITDA”) multiple has rebounded from a low of 6.9 times EBITDA to a respectable 9.2 times, but it’s still lower than 2007 and 2008.  Lower multiples and lower confidence tend to put some mid to large utilities on the sidelines.  So now we see, large companies building cash and waiting for a rebound in confidence.                               Graph 1                                                             Graph 2    Source: Mergerstat                                                                    Source:  Mergerstat                                  Graph 3                                                                  Graph 4   Source: Mergerstat                                                                    Source:  Mergerstat

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