Merrill DataSite Releases New Comments: Mergers and acquisitions holding steady in US utilities sector

Share Article -- According to new research, mergers and acquisitions in the US electric utilities sector looks set to maintain steady growth in the coming years.

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Mergers and acquisitions holding steady in US utilities sector

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According to new research, mergers and acquisitions in the US electric utilities sector looks set to maintain steady growth in the coming years. The ‘US Regulated Utilities: Expansion, Diversification Goals Continue to Support Steady Utility M&A’ report from Moody’s Investors Service, found that recent major deals in the sector have often been credit neutral due to their financing coming from equal parts debt and equity.

Future deals could well alter the credit-neutral history if their structure and execution shifts, the research found. Slow growth in the electricity usage arena has led to many utilities widening their search beyond their service territories in order to expand.

“Load growth has been moderating in recent years, the slower pace driven primarily by energy conservation and efficiency, increased distributed generation and the economic downturn,” said Moody's analyst, Jeffrey Cassella.

“The slower growth has pushed some utilities to look beyond their service territories for additional load growth in areas that are growing faster than the national average,” he added.

Major utilities such as Duke Energy Corp, MidAmerican Energy Holdings Co. and Exelon Corp look likely to turn to new acquisitions in order to fulfill their diversification and expansion desires. By following the acquisition and expansion path, they aim to boost the predictability of their cash flow and, in turn, their operational efficiency as they “spread operating and maintenance costs over a wider customer base,” the report read.

Meanwhile, smaller firms in particular look to be considering mergers in order to lower their overhead costs as a result of falling returns on equity among the utilities. Smaller utilities could also be planning to merge or acquire another utility in the hope of protecting jobs and staving off any vultures hunting for a potential acquisition target.

About Merrill DataSite
Merrill DataSite is a secure virtual data room (VDR) solution that optimises the due diligence process by providing a highly efficient and secure method for sharing key business information between multiple parties. Merrill DataSite provides unlimited access for users worldwide, as well as real-time activity reports, site-wide search at the document level, enhanced communications through the Q&A feature and superior project management service - all of which help reduce transaction time and expense. Merrill DataSite’s multilingual support staff is available from anywhere in the world, 24/7, and can have your VDR up and running with thousands of pages loaded within 24 hours or less.

With its deep roots in transaction and compliance services, Merrill Corporation has a cultural, organisation-wide discipline in the management and processing of confidential content. Merrill DataSite is the first VDR provider to understand customer and industry needs by earning an ISO/IEC 27001:2005 certificate of registration – the highest standard for information security – and is currently the world’s only VDR certified for operations in the Europe, United States and Asia.

As the leading provider of VDR solutions, Merrill DataSite has empowered more than two million unique visitors to perform electronic due diligence on thousands of transactions totalling trillions of dollars in asset value. Merrill DataSite VDR solution has become an essential tool in an efficient and legally defensible process for completing multiple types of financial transactions.

For more information, please contact Merrill DataSite: Tel: 1-866-867-0309
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Catherine Malone
Merrill DataSite
since: 12/2010
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