By opening the field to far-flung deals, PUHCA’s repeal changes the merger game.
Michael T. Burr is Fortnightly’s editor-at-large. Email him at burr@pur.com
Amid all the provisions of the Energy Policy Act of 2005, the repeal of the 1935 Public Utility Holding Company Act (PUHCA) has attracted a surprising amount of attention in the business and consumer press. In some circles, it has been portrayed as a starting gun for a mergers and acquisitions (M&A) free-for-all.
"I would go so far as to say that within the next five to 10 years, the current number of electric utilities—which numbers more than 100—could shrink to 10," Ken Hurwitz, a partner with Haynes & Boone in Washington, D.C., told the in late July.
But while some analysts predict a wave of utility M&A activity in the wake of PUHCA's repeal, others are more sanguine about the change. For example, Edward Tirello, the Berenson & Co. managing director known for foretelling the merger wave of the 1990s, expresses skepticism about PUHCA's repeal releasing a deluge of utility M&As.
"The repeal of the holding company act removes a barrier, but only one of many," Tirello says. "I don't see this as opening the floodgates to anyone who wasn't already interested in doing mergers and acquisitions."