PricewaterhouseCoopers' "Power Deal" report on M&A activity predicts a blockbuster deal era in deal volumes and values in 2006. This analysis is based on the record breaking deals in 2005 that took place chiefly due to rise in Europe's "super-regional" utilities and consolidation.
The year 2005 saw new records being made in the total number of deals, the value of these deals, single value of a deal, and the mega deals that valued over US$10 billion. There were 527 deals that valued US$196 billion, with five exceptional ones, each one of them surpassing US$10 billion.
The report points out the major factor for such a surge in deals as the European activity. The EU is getting more and more utility companies as they are predicting the customer choice that will occur due to liberalized rules in 2007. It is the domestic deals that accounts to 71% of the total deals made in 2005. Global activity trend is noteworthy as a result of the budding breed of infrastructure funds that put up global portfolios of the primary network assets.
"Around the globe, increased competition is driving companies to turn to M&A activities to deliver growth horizontally and vertically. High wholesale power, gas and carbon prices also are creating new platforms for deal activity, pushing up generation asset values and bolstering the rationale for deal prices." - feels Manfred Wiegand, Global Utilities Leader at PricewaterhouseCoopers. Compared to 459 deals in 2004, the following year saw a marked increase where the number of deals rose to 527. The total deal volume rose from US$123 billion to US$196 billion. All these encouraging statistics predicts an even better M&A activity in Global electric and gas industry in 2006.
Focus is given on clean coal, nuclear and renewable assets due to the constant increased price of gas. In the "Power Deals" report, PWC points out the chief potential regional areas. Europe alone accounted 58% of all the targets and 44% of biddings in the power deals market made worldwide in 2005. The deal value of European electricity assets have trebled. The average electricity and gas deal size in Europe saw an increase of US$542 million from US$258 million. North America, with a high power deal level, anticipates an even better one in 2006. In 2006, it accounted for one thirds of worldwide power deals with the price of M&A targets rising by 5.8%.
The deal values of power assets in Asia Pacific saw an exceptional rise in 2004, and it continued its tradition even in 2005. Total deal value rose from US$15.1 billion in 2004 to US$17.2 billion in 2005. PricewaterhouseCoopers Global Energy, Utilities and Mining group is the leader in its respective fields, and through analysis and data based prediction for 2006, illustrate the center stage role in tracking the strategic partnerships and confluences of industries worldwide by the Big Four firms.
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