The power and utilities industry has seen a surge of M&A activity in the first quarter of 2016, according to a recent PWC report. The following highlights reflect an overall positive start to the year for the power and utilities sector:
- Increase in total deal value. Total deal value for Q1 2016 hit $41.4 billion. This is up 260% from the previous quarter, where total deal value was $11.5 billion. Additionally, total deal value is up 508% compared to this time last year.
- Increase in average deal value. The average value per deal reached $1.9 billion in Q1 2016, which is an increase of 93% compared to Q1 2015. The first quarter of 2016 also saw seven deals with a value greater than $1 billion, compared to only two in the previous quarter.
- Increase in activity from strategic buyers. Strategic buyers were increasingly involved in power and utilities deals this quarter, as they accounted for 92% of the transactions in Q1 2016. This figure is up 6% from the previous quarter.
- Decrease in deals involving renewable power. The only downward trend identified in the report was a decline in the number of transactions involving renewable power. These transactions accounted for 3% of deals by value in Q1 2016, down from 8% in the previous quarter.
Ultimately, this report showcases the overall upward trends in M&A activity that the power and utilities industry has seen since the start of 2016. In particular, it will be interesting to see whether the large increases in total and average deal value continue to trend upwards in subsequent quarters, and whether the decline in deals involving renewable power reflects any broader concerns (environmental or otherwise).
The author would like to thank Samantha Cass, articling student, for her assistance in preparing this legal update.
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