How building capabilities for repeated M&A can increase shareholder value.

Despite significant recent upheavals, the energy industry's long-term consolidation is likely to continue. Many companies appear to be moving towards, or have announced, consolidation strategies in their preferred areas of the industry. ()

Much the same way that bankers used to worry about a "run on the bank," where there is an overwhelming demand for liquidity that causes a solvent bank to fail, so should energy companies be worried that their use of material adverse change (MAC) clauses might trigger an overwhelming demand for liquidity that causes a once solvent energy company to fail. Of course, the banks now have the Fed to protect the financial system from a liquidity crisis. No such luck for the energy industry.

Frontlines

The Year of Living Dangerously

Off Peak

November 15, 2000

Rx for IOUs: Slim Down

 

To an industry whose mantra of late has been "diversify and conquer," a prominent utilities consultant has some startling advice: Slim down and focus on your core strengths.

 

EEI's contract is ready to go for physical trades of electricity, but the architects say it's likely too late to make a difference this summer.

Lessons learned from Cinergy's losses in commodity markets.

After a second summer of extreme weather, contract defaults and consequent financial losses to energy companies, the financial community and shareholders are holding utilities ever more accountable when it comes to managing risk, say analysts. Moreover, they're showing zero tolerance for failure.

On Aug.

Investors look at environmental ratings for link to stock performance.

While socially responsible investors have been interested in environmental performance for some time, mainstream utilities investors are looking at the issue for a different reason - environmental leaders consistently achieve better financial and stock market performance than their less eco-efficient competitors.

Wholesale customer turns tables, threatens leveraged buyout against its own supplier.

Matanuska Electric Association, the largest customer of Alaska's Chugach Electric Association, has offered to acquire Chugach, the state's largest power company. But in launching the hostile takeover, Matanuska said it would pay not a cent to Chugach. Adding a new twist to the term "cooperative finance," the Matanuska co-op proposed a leveraged buy-out - a takeover strategy popular during the 1980s.