{"id":24896,"date":"2017-08-27T14:40:46","date_gmt":"2017-08-27T19:40:46","guid":{"rendered":"http:\/\/olduvai.ca\/?p=24896"},"modified":"2017-08-27T14:40:46","modified_gmt":"2017-08-27T19:40:46","slug":"two-u-s-utility-giants-just-got-even-larger","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=24896","title":{"rendered":"Two U.S. Utility Giants Just Got Even Larger"},"content":{"rendered":"

Two U.S. Utility Giants Just Got Even Larger<\/a><\/h3>\n\"natgas<\/picture>\n
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Two major electricity industry takeovers were announced within a few days of each other. Energy Capital Partners, a private equity firm, announced its planned acquisition of Calpine, the nation\u2019s largest generator of electricity using natural gas as a fuel. The acquisition valued Calpine at $17.3 billion ($5.6 billion for the common stock plus assumption of $11.7 billion of debt).<\/p>\n

Days later, Sempra, a California-based utility, outbid Warren Buffet\u2019s Berkshire Hathaway to buy Oncor, a Texas utility spin off from a disastrous private equity acquisition of TXU (the old Dallas-based Texas Utilities). Sempra\u2019s bid values Oncor at $18.8 billion ($9.8 billion for equity and $9 billion to take responsibility for ex-isting debt).<\/p>\n

In the case of Oncor, both final bidders had clear motives. Berkshire Hathaway has cash to invest and Mr. Buffett and Co. have targeted U.S. electric utilities for investment As a relatively large financial player, his investments have to be of a size to make a positive impact. In this case that means making relatively large acquisitions. Small ones barely register at Berkshire Hathaway.<\/p>\n

<\/div>\n

But big electric utilities don’t hit the auction block too often.<\/p>\n

Sempra may lack Berkshire’s investable cash, but is nevertheless a solidly credit worthy utility. Its stock sells at an impressive price. If it wants to go shopping for say an electric utility in Texas, it can raise the money.<\/p>\n

But let’s take a step back. Why all this seemingly frenetic M&A activity recently? If the U.S. electric utility industry was a river we’d say it sits at the confluence of three troublesome tributaries; the No Growth, the Looming Competitive Threat and the High ROE (great name for a ranch). And so the utility industry consoli-dates.<\/p>\n

Power generators, fearing the wrath of rating agencies and competitive markets have been acquiring lower risk regulated electric utility businesses whenever possible.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Two U.S. Utility Giants Just Got Even Larger Two major electricity industry takeovers were announced within a few days of each other. Energy Capital Partners, a private equity firm, announced its planned acquisition of Calpine, the nation\u2019s largest generator of electricity using natural gas as a fuel. The acquisition valued Calpine at $17.3 billion ($5.6 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[15717,15716,15037,5332,15719,15718,15038],"class_list":["post-24896","post","type-post","status-publish","format-standard","hentry","category-energy-2","tag-alpine","tag-energy-capital-partners","tag-leonard-hyman","tag-oilprice-com","tag-oncor","tag-sempra","tag-william-tilles"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24896","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=24896"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24896\/revisions"}],"predecessor-version":[{"id":24897,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24896\/revisions\/24897"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24896"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24896"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24896"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}