Over the past two and a half years, 10 large mergers have been announced, involving 21 investor-owned electric and gas utilities. Only the MidAmerican Energy merger has been completed, but the estimated market value of the pending mergers is an astounding $40.5 billion. Clearly, this recent wave of merger and acquisition (M&A) activity signals that electric utilities are positioning themselves for future competitive energy markets.
Results from Resource Data International's (RDI's) recent study, U.S. Electric Utility Industry Mergers & Acquisitions, indicate that the trend will continue (em but at a slower pace. If the pending mergers go through, the current total of 101 publicly traded investor-owned utilities (IOUs) will fall to 93. By the year 2000, RDI expects mergers and acquisitions to reduce that number to 80 (em or even 70.
These findings are based on RDI's Merger Attractiveness Ranking. The results are derived from analysis of more than 25 ranking matrices, which assess such issues as a company's strategic position, cost-competitiveness, financial performance, management experience, and potential cost savings.