Mergers and acquisitions in the North American power and utilities industry has increased significantly in 2014 as compared to the previous year, according to the PwC US' quarterly deals snapshot. There were 13 power and utilities transactions with announced deal values greater than $50 million in the second quarter of 2014, compared to seven during both the second quarter of 2013 and six mega deals (deals greater than $1 billion).
That was the highest number of mega deals in a quarter since the second quarter of 2006 and contributed nearly 93 percent of the $34.9 billion total deal value for the quarter. "Companies in the power and utilities industry are strategically pursuing assets, including those in close proximity to their existing geographic markets and/or with similar business models, to drive scalable growth and achieve operational synergies," said Jeremy Fago, PwC's U.S. Power & Utilities deals leader. "Hybrid utilities have continued to evaluate their merchant portfolios and the potential for divesting certain merchant assets, while regulated utilities and YieldCos continue to present an attractive investment for their yields and stable cash flows.
Together, these types of deals have built on the power and utilities deal momentum we saw in the second quarter, and going forward, we expect the M&A environment to continue to pick up through a combination of regulated, merchant and YieldCo driven transactions.”