Dive Brief:
- Regulated electricity providers have attracted $49 billion in takeover offers in Q2 2014, the most since Q1 2011, largely driven, according to a spectrum of utility analysts, by low interest rates and low power prices caused by a glut in natural gas that are attracting utilities to regulated assets as a hedge against a volatile unregulated market.
- The most recent reports of a pending acquisition are rumored offers from CenterPoint Energy and Borealis Infrastructure, a unit of the Ontario Municipal Employees Retirement System, for Cleco Corp, a $3.5 billion regulated power provider.
- Wisconsin Energy Corp. announced this week it will buy Integrys Energy Group Inc. for $9 billion and Exelon Corp. agreed in April to acquire Pepco Holdings Inc. in the industry’s biggest deal in three years.
Dive Insight:
Utility mergers can be difficult to execute because they tend to attract significant regulatory scrutiny and concessions required by the government can undermine the benefits of consolidation. It is sometimes easier for utilities to buy midstream assets like infrastructure for processing and transporting energy.
Industry analysts suggest a Cleco purchase could bring its shareholders at least a 20 percent premium.
Analysts say Allete Inc., valued at $2.1 billion, or Alliant Energy Corp., valued at $6.7 billion, may attract Warren Buffett’s Berkshire Hathaway Energy.
