Blackstone solar exit plugs into twin deal fads 20 Jul 2015 Stephen Schwarzman’s firm is selling panel-installer Vivint for $2.2 bln after a sizzling IPO last year. Buyer SunEdison will cover part of the 52 pct premium with an asset sale that may pay fat dividends. It will take more than a trendy industry and structure to recoup the price.
Iberdrola’s American dream gets harder to realise 2 Jul 2015 The Spanish utility’s $3 bln takeover of listed U.S. peer UIL has been dissed by the Connecticut regulator. Iberdrola can probably offer concessions to get the deal done. But the costs of doing so risk making its attempt to crack the fragmented American market less attractive.
Water woes could open taps on corporate risk 5 Jan 2015 Two-thirds of the world’s biggest companies are worried about access to water. But few are well prepared for problems. That should change as ways to track and address concerns grow. And if bosses don’t take the initiative, activist investors may force them to.
Hawaii electric-bank conglomerate gets sunny split 4 Dec 2014 The rise of solar power helped force Hawaiian Electric to sell itself to $46 bln utility NextEra. The $3.5 bln deal also puts an end to the Aloha State utility’s anachronistic ownership of a bank. The 15 pct plus surge in HEI’s stock price shows the warmth of investors’ welcome.
E.ON gets better at managing decline 12 Nov 2014 The largest German utility beat expectations in the third quarter but confirmed net profit would fall about 20 pct this year. The group is still hobbled by low energy prices, Germany’s dash to green power and its Russian exposure. It is stabilising, but not yet out of the woods.
Gas Natural’s Chile deal smacks of empire-building 13 Oct 2014 The Spanish utility will pay $7.6 bln including debt for CGE, Chile’s largest electricity distributor. This increases Gas Natural’s footprint in Latin America, countering weak growth at home. But it is paying more than 10 times 2013 EBITDA with few obvious synergies.
San Antonio plots $3.3 bln U.S. water-war strike 7 Oct 2014 The drought-prone Texas city plans to spend about that much on a project for moving H20 140 miles. It’s the controversial next leg of a strategy for securing enough water to keep business in the home of the Alamo. It’s also part of a national battle for economic survival.
Bankrupt toll road leaves taxpayer sitting pretty 30 Sep 2014 Private investors in a 157-mile Indiana toll road are set to be wiped out in bankruptcy court – but only after they sunk millions into new lanes and tolling technology. It’s a rare example of a boom-era deal successfully transferring risk from the public to the private sector.
Macquarie wrong turns put toll road in bankruptcy 23 Sep 2014 The U.S. route backed in part by the Australian bank went bust because of scant traffic, its operator says. In reality, the buyers created insurmountable potholes by overpaying, loading on debt and losing derivative bets. They need only look in the vanity mirror for blame.
Midwestern utility keeps cool in hot M&A summer 23 Jun 2014 Wisconsin Energy’s $5.7 bln takeover of overlapping Integrys will justify the 17 pct premium with cost cuts of only around 6 pct. More should easily be doable. The market-wide surge in mergers may have encouraged the deal, but no one in the Badger State is losing their head.
U.S. carbon emissions crackdown is well timed 2 Jun 2014 Obama’s proposed steep cuts in power plant pollution are bad news for the coal industry. But unlike Germany’s expensive retreat from nuclear power, the U.S. has cheap gas to fall back on. America’s shale dividend will offset any costs of going greener – at least at home.
Exelon is overpaying, even with the sandbagging 30 Apr 2014 Relative to similar deals, the U.S. utility is low-balling the projected savings from its $6.8 bln Pepco purchase. Modesty won’t fool regulators. They’ll demand a cut through lower electric bills. Even assuming more realistic synergies won’t justify a $1.1 bln premium.
BG’s CEO exit highlights bid vulnerability 28 Apr 2014 Chris Finlayson is leaving the UK gas group abruptly after another profit warning. BG says it is a question of leadership, not strategy. Chairman Andrew Gould looks like a safe caretaker. But until a new CEO is in place, BG’s takeover defences are weak.
Carlyle descends into a public-private inferno 3 Apr 2014 The mayor of a U.S. city once called Hellgate is using eminent domain to try and seize the local water utility the buyout firm acquired in 2011, a deal he backed. The clash shows why joint efforts between governments and investors to improve infrastructure don’t proliferate.
UK energy watchdog supercharges breakup option 27 Mar 2014 The possibility of a radical restructuring of energy companies based in Britain just became a probability. A wide-ranging competition inquiry may eventually lead to splitting generation from supply, in line with the original privatisation plan. Centrica is in the crosshairs.
Lego clan beats Goldman in $1.5 bln ISS float 14 Mar 2014 An investment by the toymaker’s founding family helped cleaning giant ISS cut debt in 2012. At IPO this brought a 41 pct annual return. That beats the result for EQT and Goldman Sachs. They can just be glad to be out after over eight years of ownership and several failed exits.
Debt is E.ON’s biggest headache 12 Mar 2014 Germany’s largest utility cut net debt by 11 pct in 2013, to 32 bln euros. But EBITDA is falling even faster. Despite a sharp dividend cut and scaled-down capital expenditure, E.ON’s medium-term leverage targets are becoming harder to achieve.
TXU’s carcass scavenged for tax meat 27 Feb 2014 The Texas utility renamed Energy Future is nearly bust six-plus years after the $45 bln takeover led by KKR and TPG. A flock of buyout firms and hedge funds, including Apollo and Avenue, are clawing at each other for the scraps. This odd beast has juicy bits buried in its books.
Political assault on Centrica is more than hot air 10 Feb 2014 UK Energy Secretary Ed Davey has waded into a regulatory inquiry, noting high margins in gas supply and mooting potential breakups. Investors in Britain’s top gas supplier are aghast. But Davey is onto something. Margins do indeed look rich, and competition could be stoked up.
BG makes a habit of disappointing investors 27 Jan 2014 The UK gas company’s shares fell 15 pct after it predicted lower production this year and the next due to problems in Egypt and America. BG has traditionally enjoyed a premium valuation for its growth. But it clearly faces the same output and cost pressures as its peers.