Trends

Fortnightly Magazine - July 15 1996
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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.

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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.

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