Global power sector M&A deals were worth $ 174.4 bn in 2011

Jan 24, 2012 12:00 AM

Mergers and acquisition deals in the power sector registered a combined worth of $ 174.4 bn globally in 2011, a 16 % growth vis-a-vis the previous year, according to a report.
The PricewaterhouseCoopers' annual review of M&A deals in the global power sector said the total deal value in the power sector was up 16 % from $ 150.5 bn in 2010 at $ 174.4 bn in 2011.

The number of deals were down at 583 in 2011 from 670 in the preceding year.
According to the report the value of the deals was boosted by the strong performance in the US and Asia-Pacific region. Among various reasons cited for consolidation in the sector include companies looking at gaining a larger presence in growth markets and strong international interest in infrastructure assets.

Deal activity in the Americas surged in 2011, contributing $ 58 bn to total M&A activity. Meanwhile, bidders from Asia-Pacific were involved in $ 14.1 bn worth of deals last year, with Asia-Pacific entities, in addition, accounting for the largest number of deals during the year, with a total of 156 transactions.
"Asia-Pacific buyers and sellers were behind the largest number of deals in 2011. Any softening of European valuations, for example, will further heighten the interest of Asia-Pacific buyers, already helped by exchange rates," the report noted.

By way of contrast, Europe recorded its lowest share of worldwide power M&A deals in terms of value since PwC started analysing deal-making in the sector in 1999, with the total deal value in Europe down 43 % year-on-year to $ 39.8 bn in 2011 from $ 70.3 bn in the previous year.
"It's a different M&A world that is less euro-centric. European companies are looking to South America and other growth markets. Asia-Pacific buyers are busy in Europe. The US deal flow is compelling and has further to go if current deals get the regulatory green light," PwC Global Power and utilities leader Manfred Wiegand said. "There are plenty of reasons to expect deal flow to continue unless the current crisis has a worldwide recessionary effect," he added.

Looking ahead, the report noted, "A mix of divestment, repositioning and market growth imperatives continue to make for potentially buoyant power deal conditions.”
“But a pick-up remains stalled as concerns about the euro zone crisis and economic growth persist."

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