While the rationale for a given transaction is specific to that transaction, there are some trends:
- International acquirers look to the U.S. when there are no or limited opportunities for growth within their own borders or regions
- Some transactions may offer the added benefit of providing a platform for future organic growth and transactions in the utility or related space
- Certain transactions may enable synergies (e.g., operational, market access, scope of services) benefitting the seller and the buyer
- International acquisitions may benefit from national diversification of business and financial risks (e.g., economic, political, financial, weather)
- Allowed ROEs and equity ratios may be higher in the U.S. than in some acquiring countries. Illustrating this point, the following charts track the differences between allowed ROEs and equity ratios for Canadian and U.S. electric utilities over the past two decades.
Source: Concentric Energy Advisors, Inc. research with data from SNL/S&P Global Market Intelligence.
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