AI Issue 9 2017

Acquisition International - September 2017 29 August has been an extremely impressive month in terms of the aggregate value of deals with targets in the energy, environmental and cleantech sector, according to Zephyr, the M&A database published by Bureau van Dijk. In the month under review, there have been 199 deals worth a combined $69,224 million. n terms of value, August has been surpassed by only one month in 2017; in March 2017 deal making of $88,906 million was recorded. Value has been boosted considerably by two large transactions. The first of these was worth $18,800 million and involved Sempra Energy, picking up a 60% shareholding in Energy Future Holdings. This was followed by a $17,132 million buyout of US electricity distributor Calpine by Energy Capital Partners, Access Industries and Canada Pension Plan Investment Board, among others. These two deals are worth a combined $35,932 million and therefore account for 52% of the month’s total value. In addition, there were four other deals announced during August which were worth more than $3,000 million each and all featured in the sector’s top 25 deals by value of 2017 to date. In fact, the aforementioned Energy Future Holdings deal is the second largest to have been announced in the industry, since the start of January. These six transactions are largely the reason for August’s impressive value result and have undoubtedly boosted figures considerably for the month. August’s impressive showing has also had a big impact on quarterly results. So much so that, although there is still over a month to go until the end of Q3, value has already surpassed Q2’s figure. Since the start of Q3, just 473 deals worth a combined $95,441 million have been signed off. In terms of volume, this is some way behind Q2’s 1,012 transactions. Despite this, value is already up on the $93,247 million-worth of deal making announced in the previous quarter and is not far off the $122,732 million injected into the sector, during Q3 of 2016. Of the six deals announced in August, which have made the year’s top 25 by value, three had targets based in the US. As such, it is not surprising to see North America tops the regional rankings for Q3 Energy, Environmental, CleantechM&AUpdate I Bureau to date, with deal making there of $61,721 million. This places the region well ahead of second-placed Western Europe with $21,982 million. The Far East and Central Asia was third, with $10,796 million. Interestingly, the latter topped the volume rankings with 132 deals, while North America was second with 121 and Western Europe was third with 115. The most valuable transaction with a target in the energy, environmental and cleantech sector to have been announced during 2017 to date, featured an Indian company and closed in March. This deal involved the purchase of a stake of just over 36% in Indian oil and gas explorer, Reliance Industries, by bidders including Devarshi Commercials and Tattvam Enterprises and was worth $23,143 million. The sector’s second-most valuable deal of the year, was the $18,800 million Energy Future Holdings transaction, followed by a $17,200 million purchase of the remaining 59% stake in natural gas producer ONEOK Partners, by Oneok. That deal was announced in February and is slated to close during the third quarter of this year. In conclusion, the high levels of investment in the energy, environmental and cleantech sector in August have pushed values for Q3 to date to a high level. Whether this level of deal making can be sustained over the coming months remains to be seen, but as we have seen before on a regular basis, it is often only a few deals which make the difference when it comes to how successful a timeframe has been in terms of M&A activity. “...it is often only a few deals which make the difference when it comes to how successful a timeframe has been in terms of M&A activity.”