M&As Decreased In The Nuclear Energy Market In Q4 2011

Monday 13 February 2012, Amsterdam

The report provides detailed information on M&As, equity and debt offerings, private equity and venture capital (PE/VC) and partnership transactions recorded in the nuclear energy industry in Q4 2011. The report discloses detailed comparative data on the number of deals and their value in the past five quarters, categorized into deal types, segments and geographies. The report also offers information on the top advisory firms in the nuclear energy industry.

M&As Decreased In The Nuclear Energy Market In Q4 2011

M&As and asset transactions, which include changes in the ownership and control of companies or assets, in the nuclear energy industry registered a significant decrease of 91% in deal value with $143m in Q4 2011, as compared to $1.6 billion in Q3 2011. The high deal value in Q3 2011 was due to the high value deal of SPX’s acquisition of CLYDEUNION Pumps for $1.2 billion. The number of M&A deals also decreased marginally from 35 in Q3 2011 to 34 deals in Q4 2011.

The equipment and services sector registered eight deals worth $53.7m in Q4 2011, as compared to seven deals worth $1.4 billion in Q3 2011. North America recorded substantial nuclear energy M&A activity with 14 deals in Q4 2011, followed by Asia-Pacific with nine deals.

According to Prabhanjan Singh, an Analyst, “Amid the affirmative results of stress test and government’s commitments to tread the nuclear plans and expand nuclear industry, the nuclear sector is still experiencing some sign of vigilant mode wherein the companies are hesitant to make new moves in nuclear sector. Siemens decision to pull out from nuclear business in Sept 2011 has rendered a catch-22 for nuclear patrons. But this stance of utility companies may not sustain for long period, because the growing energy needs and the government’s commitment to cut down carbon emission rates will compel companies to opt for nuclear power generation. The sheer slump in M&A deals value in Q4 2011 can be attributed mainly to the very high value deal of SPX’s acquisition of CLYDEUNION Pumps for $1.2 billion in Q3 2011. Barring this SPX’s deal the industry has witnessed a little decline in M&A deals.”

New Investments In The Nuclear Energy Industry Decreased In Q4 2011

Investments in nuclear energy companies, including new investments through equity/debt offerings and financings by PE/VC firms, recorded a decrease of 22% in deal value with deals worth $15.3 billion in Q4 2011, as compared to deals worth $19.7 billion in Q3 2011. However, the number of deals increased 48% from 92 in Q3 2011 to 136 in Q4 2011. Equity offerings accounted for 80% of the total financing deals with 109 deals in Q4 2011, and in terms of capital raised, debt offerings accounted for 95% of the deal value with $14.6 billion in Q4 2011.

Europe topped the table with investments worth $8.5 billion from 15 deals in Q4 2011, followed by Asia- Pacific with investments worth $3.5 billion from 48 deals in Q4 2011. Enel’s two separate bond offerings with a combined worth of $3.1 billion, and BHP Billiton’s three separate senior note offerings worth $3 billion were some of the high value deals registered in Q4 2011.

According to Prabhanjan Singh, an Analyst, “The decrease in investments in nuclear energy companies, including new investments through equity/debt offerings and financings by PE/VC firms can be attributed to the anti nuclear stance taken by various countries post Fukushima nuclear mishap. Siemens plan to pull out from nuclear have rendered nuclear industry at cautionary mode. However, the nuclear industry has started regaining the lost grounds after Japan’s Fukushima nuclear disaster. Some countries have conducted stress test on their nuclear reactors. In some countries it is ongoing and at different stage of completion. The results of stress tests so far have been encouraging for nuclear patron. It can alleviate the anti nuclear public sentiments and help in building public confidence in nuclear segment.”

Decreased Financing Through Debt Offerings In Q4 2011

Global debt offerings, including public and private debt placements, by nuclear energy companies registered a decrease of 8% in the number of deals and 24% in deal value with 24 deals worth $14.6 billion in Q4 2011, as compared to 26 deals worth $19.1 billion in Q3 2011. Public debt offerings registered a significant decrease of 47% in deal value with $9.4 billion in Q4 2011, as compared to $17.9 billion in Q3 2011, while private debt placements registered a substantial increase in deal value from $1.3 billion in Q3 2011 to $5.2 billion in Q4 2011.

Global equity offerings, including initial public offerings (IPOs), secondary offerings, and private investment in public equities (PIPEs), registered an increase of 68% in the number of deals and 20% in deal value in Q4 2011. The industry registered 109 deals worth $693.2m in Q4 2011, as compared to 65 deals worth $576.5m in Q3 2011. The average deal value registered a decrease from $9m in Q3 2011 to $6.4m in Q4 2011. PIPE segment accounted for 80% of the total number of deals, with 87 deals in Q4 2011. In total, PIPE segment registered a substantial increase of 93% in the number of deals with 87 deals in Q4 2011, as compared to 45 deals in Q3 2011. However, deal value registered a significant decrease of 61% with $198.1m in Q4 2011, as compared to $502.2m in Q3 2011. Secondary offerings accounted for 71% of the total investments, with $494.7m in Q4 2011. Overall, the segment registered an increase in the number of deals and deal value with 21 deals worth $494.7m in Q4 2011, as compared to 20 deals worth $7.3m in Q3 2011.

Investments Decreased In North America And Europe In Q4 2011

North America and Europe recorded a decrease of 38% and 39% in deal values with $3.3 billion and $8.6 billion in Q4 2011, as compared to $5.3 billion and $14 billion respectively in Q3 2011. Some of deals that contributed to the high deal value in Europe in Q3 2011 include Centrica’s public offering of notes for $8 billion and SPX’s acquisition of CLYDEUNION Pumps for $1.2 billion. However, the number of deals in both the regions increased considerably from 58 and 13 deals in Q3 2011 to 87 and 17 deals respectively in Q4 2011.

The Asia Pacific region registered an increase in the number of deals and deal value with 59 deals worth $3.6 billion in Q4 2011, as compared to 57 deals worth $2 billion in Q3 2011. Australia recorded considerable nuclear power activity in the Asia-Pacific region, accounting for 92% of the number of deals with 54 deals in Q4 2011. The increase in deal activity in Australia was primarily driven by the expected increase in demand for uranium resources as nuclear power programs are on the rise. The number of deals in China remained unchanged with one deal each in Q3 2011 and Q4 2011.

According to Prabhanjan Singh, “The news reports and a series of events after the nuclear reactors at Fukushima caught fire resulted in a spread of public discontent over the use of nuclear energy for power generation. Strong sentiments were expressed across Europe and North America discouraging the expansion of their nuclear power sectors. A strong negative sentiment towards nuclear power still seems to prevail in European countries, with Germany announcing a complete nuclear phase out by 2022, followed by the Swiss government also calling for a debate on nuclear phase out recommendations by their cabinet. Italy is also abandoning any further developments in this sector. However, other European countries such as the UK, France and Czech Republic are supportive towards the continued use of nuclear power, due to their high reliance on it as an energy source. The decrease in investment in North America and Europe may not sustain for long given the need of clean power and soaring fossil fuel prices.”