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Power quiet, gas quieter

MERGERS and acquisitions (M&A) activity in the global gas and power industries made a low-key start to 2003, says PricewaterhouseCoopers (PWC).

Combined deal values in electricity and gas in the first six months of the year amounted to $15.2bn - less than a third of the $53.7bn reported 12 months earlier, and 72% down on the year. But the gas sector saw a much sharper fall, with total deal value dropping from $25.6bn in the first half of 2002 to $1.4bn in the first six months of this year. Nine of the top 10 deals were electricity transactions.

In a report, based on Dealogic data, Mark Hughes, European utilities leader at PWC, says the market is still experiencing the aftermath of the US retreat from Europe. Major players remain quiet, while digesting and integrating previous acquisitions. 

Hughes adds that gas-deal values dropped like a stone, from $25.6bn for the first half of 2002, to $10.6bn in the second half of 2002, to a meagre $1.4bn in the first half of 2003. 

While deal values were sharply down, the number of completed transactions declined less severely - from 215 to 207 in the case of power, while the number of transactions in gas rose from 43 to 47.

Table 1: Cross-border gas and power deals

 

Number

Value of

 

of deals

deals ($m)

Gas

1H 02

1H 03

1H 02

1H 03

Cross-border

14

16

3,353.50

1,84.9

Domestic

29

31

22,269.10

1,208.30

Total

43

47

25,622.70

1,393.10

         

Power

1H 02

1H 03

1H 02

1H 03

Cross-border

83

74

17.7

8.0

Domestic

132

133

36.0

7.2

Total

215

207

53.7

15.2

 

Source: Dealogic



Cross-border transactions, which accounted for 33% of total deal values in January-June 2002, played a more significant role overall, accounting for 52% of deal values in the first half of this year.

M&A activity in power and gas remains focused on Europe. Asia-Pacific activity has overtaken North American transactions, ranking second behind Europe both in number and value for bidder transactions.

*Power deals - merger and acquisition activity in the global electricity and gas market - half-year review 2003

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