Two big utility mergers anchored energy sector acquisition deals in the second quarter, but even those mammoth transactions couldn’t match bigger overall moves earlier in the year, according to accounting and consulting firm PwC.
The firm’s North American Power and Utilities Deals Insights for the second quarter highlights big M&As involving Texas-based CenterPoint Energy and Vectren Corp—valued as the quarter’s biggest deal at $8.1 billion—and Florida-based NextEra Energy’s agreement to acquire Gulf Power from Southern Co. at $5.7 billion in value. Overall, though, the quarter’s overall M&A deal value of $23 billion was 20 percent lower than the first quarter total above $28 billion.
It was, however, nearly three times bigger than the apparently quiet second quarter of 2017, according to PwC.
“We saw previously highlighted themes continue to take shape as dealmakers looked to rationalize portfolios—shoring up balance sheets, evolving business models and capitalizing on growth opportunities in the industry,” Jeremy Fago, U.S. Power and Utilities Deals Leader for PwC, said in a statement.
The renewable energy sector accounted for barely a fourth of deal value, or 27 percent, in 2018’s second quarter, compared to 36 percent in the first three months, PwC report shows. The drop represented a decline of about $4.1 billion in renewable energy dealmaking.
Centerpoint-Vecren and NextEra-Gulf were the only two mega deals ($5 billion or more) announced in the three months ending June 30. No mega deals were announced in the same period a year ago, according to PwC.
The Vectren deal will expand CenterPoint’s footprint, stretching electricity and natural gas delivery to eight states. Gulf Power will add 450,000 customers, 9,500 miles of power lines and 2,300 MW of generating capacity to NextEra’s Florida total, according to reports.
Subject to various approval, CenterPoint and Vectren hope to close their deal by the first quarter of 2019. NextEra hopes to complete its Gulf Power buy from Southern Co. by the first half of next year.