PwC: North American power and utilities M&A activity stalls

By Rob Starr, Content Manager, Big4.com

According to PwC US, North American power and utilities mergers and acquisitions (M&A) activity continued to decline in the first half of 2012. The industry saw an overall trend toward asset deals with an emphasis on alternative energy transactions in the first half of 2012, and although the number of power deals was down significantly, with the recent NRG-GenOn merger announcement, the outlook for increased deal activity during the second half of the year looks more promising.

The average value of announced deals greater than $50 million decreased to $580 million from $1.7 billion during the same six month period in 2011. With regard to foreign interest in North American utilities and power generation, PwC continues to see a significant slowdown in inbound investment in regulated utilities due to potential energy policy and regulatory changes and challenges.

John McConomy, PwC’s US power and utilities transaction services leader commented:

“While challenges hovering over the power and utilities sector are expected to continue over the short term, the industry continues to be ripe for consolidation. Companies have been watching the regulatory approval process of major announced transactions and we anticipate that the successful approvals that occurred in the first half of this year will lead to stronger M&A activity in the regulated space in the second half,” he said.