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North American Power and Utilities Deal Activity Soars

Large infrastructure deals drive uptick in M&A

Merger and acquisition volume and value increased significantly in the first quarter of 2016 both sequentially and year-over-year, according to PwC US ’s quarterly deals snapshot, North American Power & Utilities Deals: Q1 2016.

The first quarter was the most active for power and utilities deals in recent history, with 22 transactions (with announced deal values greater than $50M) accounting for $41.4B in value. Comparatively, there were 12 deals totaling $11.5B in Q4 2015 and seven deals worth $6.8B in Q1 2015.

Key Q1 2016 stats include:

  • Megadeals: There were seven megadeals – defined as deals with values greater than $1B – totaling $39.0B, compared with two megadeals worth $7.9B in the previous quarter.
  • Strategic vs. Financial Buyers: Strategic investors accounted for 17 of the 22 transactions and 92 percent of total deal value in the first quarter, while financial investors accounted for eight percent of total deal value.
  • Inbound Activity: There were five inbound deals accounting for 71 percent of deal value, up from three inbound deals in the previous quarter.
  • Renewable M&A Activity: Renewable power deals accounted for only three percent of total deal value, a slight decline from eight percent of total deal value in the previous quarter.

2016 Outlook: The power and utilities industry kicked off the year with an uptick in deal activity and value, driven by a number of large corporate infrastructure transactions, setting the M&A tone for 2016. We saw significant inbound interest from Canada, which is likely to remain as Canadian investors look to the U.S. for growth opportunities. Additionally, as renewable and natural gas generation continues to increase its penetration in the U.S. and as dealmakers look for opportunities to diversify, we expect infrastructure investment to continue as a key theme in 2016.

 

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