Electricity dominant in 2003 energy M&As.

Last year marked a historical low for mergers and acquisitions in the global electricity and gas market, according to PricewaterhouseCoopers' annual report Power Deals. The deal numbers fell marginally from 424 in 2002 to 398, but values fell dramatically from US$84.9 billion to US$43 billion. However, a substantial 69% of the value of deals made in 2003 was achieved in the second half of the year, which suggests that the market is finally over the worst.

Large gas deals were notably absent in 2003 as electricity dominated activity. The top ten deals were all in electricity, providing a total deal value of US$18.4 billion.

European deal activity slumped in 2003. With most of the European utilities market already consolidated, there were few opportunities for the mega deals that characterised much of 2001 and 2002. The total value of European transactions fell from US$65.8 billion in 2002 to US$17 billion, leaving Europe with a 40% share of the total deals value, compared to 78% in the previous year. Deal numbers fell 21% from 200 to 158.

Helped by the collapse in deal values in Europe, North America has increased its share of global deals from 13% to 42% of total value. Acquisitions in North America, mainly by U.S. investors, totalled US$18.2 billion in 2003, up from US$11 billion.

The prime purpose for M&As in 2003 was consolidation through horizontal and vertical integration, which accounted for more than 65% of the total number of transactions. There was a strong domestic focus, particularly in the North American market. And within Europe, further steps were made to consolidate the domestic footprint.

For more information, visit www.pwcglobal.com.

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