The largest public utility merger in American history? It's not so easy for new era energy to acquire Duke energy

China-News.Net - Finance October 1, 2020, 2:32 am Peng Peng

Zhitong finance app has learned that it is reported that if can successfully acquire Duke energy, it will be the largest acquisition of a public utility company in the history of the United States.

Michael Weinstein of Credit Suisse said taking over Duke's territory in Florida, North Carolina and Indiana would be particularly appropriate for the new era energy, which is pushing for wind and solar farms to replace coal-fired power plants, but would put some pressure on credit ratings.

At the same time, Wells Fargo analysts said Duke energy's multiple businesses could pose challenges to the regulatory approval required for exchanges.

Julien Dumoulin Smith, an analyst at Bank of America, pointed out that the acquisition of Duke energy is in line with the new era energy's goal of conducting regulated utility transactions in the southeast and Midwest of the United States. He added that new era energy could still seek a larger deal to "switch back to the utility sector" of its business portfolio.

In addition to the high regulatory barriers, JINJOO Lee also pointed out that new era energy could be burdened with huge debts for such a large-scale acquisition, especially in the case of hostile acquisitions. Despite its huge market value, new era energy has only $1 billion in cash on its balance sheet, and its leverage ratio is relatively high. The ratio of net debt to EBITDA is 4.5 times.

In 2017, new era energy failed to successfully acquire Oncor electric due to its failure to reach an agreement with the Texas Public Utilities Commission. It is worth noting that the latter is much smaller than Duke energy. As early as 2016, Hawaiian regulators organized the company's attempt to acquire the smaller Hawaiian electric.


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