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Driven by a massive deal, North American power and utilities merger and acquisition (M&A) volume and value experienced significant growth in the second quarter of 2013 (Q2'13) compared to a year ago, finds a new report from PwC US.

The report says the quarter's deal value was dominated by the $10.4 billion acquisition of NV Energy by MidAmerican Energy Holdings.

There were seven power and utilities deals worth $50 million or more in Q2’13, representing $12.5 billion in total deal value, compared to two deals totaling $668 million in the second quarter of 2012. The NV Energy/MidAmerican deal accounted for 83% of the total value of deals worth $50 million or more.

When excluding that transaction, the total value of deals was $2.1 billion, still 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 Q2’13, compared to $333 million in the second quarter of 2012, as a result of the mega deal. The Top 10 deals of Q2’13 are shown in the chart below.

10193_top10deals.jpg

"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," says Jeremy Fago, U.S. power and utilities deals leader at 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."

The report adds that 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," adds Fago.

Foreign interest in U.S. utilities and power generation continued in the second quarter, with non-U.S. acquirers representing nearly 60% 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," comments Rob McCeney, U.S. power and utilities deals partner at PwC.

For more information on the PwC report, click here.





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