Insights

2018 - The Year of the Special Situation

Firm Thought Leadership

Contributors: Megan Berge, Jonathan Bobinger, Joshua Davidson, Michael Didriksen, James Douglass, A.J. Ericksen, Peter Farrell, Jennifer Golinsky, Adam Griffin, Leah Burcat Hastings, Kyle Henne, Thomas Holmberg, Jeff Kayes, Bill Lamb, Aaron Lee, Don Lonczak, Martin Menski, Steven R. Miles, Jon Nelsen, Jay Ryan, Carlos Solé, Mark Spivak, Martin Toulouse, Susan Toumanian, Elaine M. Walsh

 

TO: CLIENTS AND OTHER FRIENDS OF THE FIRM

Each year around this time we take the opportunity to review select electric and gas transactions and other significant industry developments over the past year and offer our views on what they may mean for the coming year.

The dollar volume of mergers and acquisitions in the U.S. electric and gas (excluding upstream oil and gas) industry during 2018 set a new high-water mark.  Deal volume for transactions in the United States was over $359 billion, well above the $213 billion recorded in 2017.[1]    

The entire increase, however, was the result of increased activity in the midstream, pipeline and MLP space where transaction volume was over $285 billion, more than twice the volume recorded in any previous year. As we discuss in more detail below, two factors were driving this extraordinary transaction volume – MLPs being acquired by their sponsors and continued consolidation in the sector.  Transactions among regulated electric utilities also decreased slightly to $32.7 billion from $36.5 billion in 2017.  The two largest transactions involving regulated electric companies were Dominion Energy’s acquisition of SCANA Corporation and the acquisition of Vectren Corporation by CenterPoint Energy.  Among LDCs, volume dropped to $4.8 billion from a relatively high $8.6 billion in 2017.  The only major LDC transaction announced in 2018 was the acquisition of Pennsylvania Natural Gas by Aqua America from SteelRiver Infrastructure Partners.  Volume of transactions announced involving electric generation assets fell dramatically to $7.3 billion from $32.5 billion in 2017 due to the absence of any major transactions like Calpine’s going private transaction and the merger of Dynegy and Vistra Energy, both of which were announced in 2017.  Transaction volume for renewable generation assets also jumped to $21.4 billion in 2018, up from $13.1 billion in 2017, which in turn was a significant increase from $6.6 billion in 2016.  The water sector also was unusually active during 2018.  Deal volume was over $6 billion, most of which was accounted for by the struggle for control of Connecticut Water Service and SJW Group.  Some of these transactions are discussed in more detail below. 

The discussion below covers the following areas:

  • Regulated Utilities
  • Independent Power Producers and Generation Assets
  • Master Limited Partnerships and YieldCos
  • Renewables
  • Tax Reform Act – Impact on Renewables
  • Environmental Regulation and Litigation
  • Liquified Natural Gas (LNG)
  • Project Finance
  • Latin America and the Caribbean
  • Africa

 To read the full article, click here.

 


 

[1]  Source: S&P Global, SNL Energy, transactions with announced transaction values of $100 million or more. 

 

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