By opening the field to far-flung deals, PUHCA’s repeal changes the merger game.
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."