In this report, we look at merger and acquisition (M&A) activity in the power sector over the last five years. We have also highlighted potential future takeover targets in the sector, which companies are likely to acquire them, and why.
The global power M&A market remained strong in 2018 with transaction volumes reaching $158bn, the second highest in the last five years. However, the number of deals registered decreased to 622, compared to 651 deals in 2017. As of 2019 year-to-date (YTD), 244 M&A deals were witnessed.
The largest announced M&A deal in the power industry in 2018 was the acquisition of Innogy by E.ON for $52.9bn.
Deals around coal-fired plants, renewables (particularly solar, hydro and wind), and gas fired plants were prominent in M&A activity. Deals featuring renewable energy are expected to set the trend in coming years due to growing awareness of clean energy and desire to meet global targets set by the Paris agreement, leading towards low-carbon emission investments.
Some of the key catalysts driving these financial activities include emergence of new markets, thinning margins, investment in renewable energy, and the shift away from exposure to fossil fuels, mainly coal.
- The report analyses the impact of M&A as a theme on the power industry.
- The report discusses M&A trends in the power industry and how these M&A deals have benefitted power companies.
- The report analyses major M&A deals in the power industry and highlights the key developments across the various sectors within the industry.
- The report also identifies potential acquisition targets that are aligned towards one or more specific themes in the power industry.
- To understand major M&A trends in the power industry and their significance on the power industry.
- To gain insights of the major deals undertaken by power companies across various sectors.
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3 M&A TRENDS IN THE POWER INDUSTRY
4 POTENTIAL ACQUISITION TARGETS OVER THE NEXT TWO YEARS
4.1 Power Generation
4.2 Power transmission and distribution
5 M&A ACTIVITY OVER THE LAST FIVE YEARS
5.1 Mergers and Acquisitions
6 APPENDIX: OUR “THEMATIC” RESEARCH METHODOLOGY
6.1 Viewing the world’s data by themes makes it easier to make important decisions
6.2 Traditional research does a poor job of picking winners and losers
6.3 That is why we developed our “thematic engine”
6.4 How do we create our sector scorecards?
6.5 What is in our sector scorecards?
6.6 How do we score companies in our thematic screen?
6.7 How our research reports fit into our overall thematic research ecosystem
Availon, Acciona, Brookfield Business Partners, China Guodian, China Nuclear Engineering & Construction Corporation, China National Nuclear Corp, CenterPoint Energy, Dominion Energy, E.ON, Enel Green Power RSA (Pty) Ltd, Engie, EnBW, EUROS, Elia System Operator NV, Eurogrid International SCRL, Eurowind Energy, Eniig Renewables, Greenko Group, GE, Hanwha Solar Holdings, Innogy, LM Wind Power, NextEra Energy, National Power, Nordex, Northern Power Systems, Orange Renewable Power, SSP Technology A/S, Santee Cooper, SCANA, Siemens Gamesa Renewable Energy, Senvion, Kenersys, Vestas, Vectren, WEG SA, Westinghouse
The global power mergers and acquisitions (M&A) market remained strong in 2018 with transaction volumes reaching US$158bn, the second highest in the last five years. However, the number of deals registered decreased to 622, compared to 651 deals in 2017, according to GlobalData.
Out of the 622 transactions reported in 2018, 597 were acquisitions while the remaining 25 were mergers. As of 2019 year-to-date (YTD), 244 M&A deals were witnessed. The largest announced M&A deal in the power industry in 2018 was the acquisition of Innogy by E.ON for US$52.9bn.
GlobalData’s latest theme report: ‘M&A in Power - Thematic Research’ reveals that the solar energy segment registered the highest number of M&As during the period 2015–2019 YTD with 661 M&A deals. It is followed by T&D, wind, fossil fuels and hydropower segments, with 654, 461, 305 and 214 M&A deals, respectively.
The report highlights that over the past few years, the power industry has seen a transition towards sustainable clean energy. Power utility companies in mature markets are now witnessing a wave of consolidations, looking to create scale due to the shift towards renewable energy sources, which is pushing them to alter their business models. The consolidation through acquisitions is driven mainly by few companies’ incapability to attain that organically and the acknowledgment that companies require collaboration or cooperation for this transition to occur.
Sneha Susan Elias, Senior Power Analyst at GlobalData, comments: “Power and utility companies are focusing on crucial climate goals and measures in the form of clean energy growth and enhanced natural gas-fired generation to deal with the intermittency issues, safety and security of energy supply, phase-out of coal-fired power plants and nuclear decommissioning. M&A deals involving renewable energy are expected to rise in future due to power and utility companies’ transition towards sustainable clean energy.
“Over the coming two to three years, M&A activity in the power industry is likely to remain strong, backed by a global urge to move away from thermal power towards renewables, although the former will remain relevant.”
The material was prepared in August, 2019.