Power

Siemens’ M&A timing needs a spot of fine-tuning

20 Jun 2016

The German group overpaid for U.S. oil kit maker Dresser-Rand just before the oil price collapsed. Now it is to fork out $1.1 bln to team up with wind turbine rival Gamesa, whose shares have rallied in recent years. Had it got its timing better, Siemens could have saved $3 bln.

Siemens and Gamesa’s tie-up puts wind in their sales

17 Jun 2016

The German engineer is handing its wind assets and 1 bln euros to the Spanish group in return for a 59 pct stake. In wind power, scale matters. Combining Gamesa’s onshore emerging-markets presence and Siemens’ offshore developed-market focus also sounds a good idea.

U.S. $12 bln utility coupling lacks spark

31 May 2016

Great Plains Energy’s deal for larger neighbor Westar has the modest premium and coy savings target typical in deals between regulated firms. Even if synergies come in higher than hinted, customers may get any surplus. Investors may be right to worry that the buyer is overpaying.

Negative rates turn up in useful spot: electricity

18 Apr 2016

Rising production of green energy combined with stagnant demand and the high cost of shutting down conventional plants is causing some producers to pay buyers to take power. Unlike the controversial central bank policy, this variety of negative rates has more clear-cut benefits.

SunEdison burns new financial fad to a crisp

18 Apr 2016

The once high-flying solar company has engineered itself to the verge of bankruptcy. Its tantalizing but risky business model relied on selling assets to tax-advantaged spinoffs. So-called yieldcos may disappear over the horizon but the sun never sets on shortsighted greed.

Collapsed Peabody is ghost of oil future

13 Apr 2016

The largest U.S. coal producer filed for bankruptcy, felled by pollution concerns and declining costs of rival fuels. Oil companies may want to pay heed. Most of what they extract is used in transport. Falling electric-car and battery prices are canaries in the oil fields.

German utilities hang on for grand nuclear bargain

19 Feb 2016

Shares in RWE and E.ON have been pounded, partly because of uncertainty over how they will be made to pay for Germany’s decision to scrap nuclear energy. A clear resolution, expected by the end of February, could boost their shares – in RWE’s case, by as much as a fifth.

Billionaires add thrust to clean-energy moon shot

30 Nov 2015

Bill Gates, Mark Zuckerberg, Jeff Bezos and Jack Ma are among those pledging to pool their lucre for big investments in climate-friendly R&D. The aim is worthy but such ambitious projects have a mixed record. At least these entrepreneurs know how to tolerate serious cash burn.

Climate will supplant shale as top energy disruptor

27 Nov 2015

The world’s politicians may be about to get serious on cutting greenhouse gases at the U.N. Paris confab. And shareholders are pushing Big Oil to disclose global warming risks. The consequences for the industry will be longer lasting than the recent oil production revolution.

Playground weaklings give Li Ka-shing bloody nose

25 Nov 2015

Hong Kong shareholders rejected the tycoon’s $12.4 bln bid to merge his listed energy and infrastructure units. It’s another sign institutions in the Chinese territory are increasingly willing to exercise their limited powers. Companies can no longer take support for granted.

Malaysia remains fragile despite China power deal

24 Nov 2015

Troubled sovereign fund 1MDB will sell power assets to China’s CGN for $2.3 bln. To resolve its debt woes, the investor still needs to execute a larger bailout deal with Abu Dhabi. Even then, graft probes will keep up the pressure on Malaysia’s prime minister and the currency.

German nuclear relief masks deeper power shortage

12 Oct 2015

Shares of E.ON and RWE jumped more than 10 pct as regulators approved the sector’s 38 bln euro nuclear provisioning. But overall prospects remain dismal. Rules favouring green energy production dent wholesale prices. Exposure to carbon-rich lignite is an Achilles’ heel. 

Li Ka-shing’s power deal is at risk of a jolt

29 Sep 2015

The tycoon’s Cheung Kong Infrastructure unit wants to buy cash-rich affiliate Power Assets for $11.6 bln in stock. Investors have the motive and the means to push for better terms. But they need to believe the rewards of a sweetened offer outweigh the risks of Li walking away.

Malaysia’s weak currency may power 1MDB cleanup

24 Sep 2015

The scandal-hit fund is seeking to ease its financial woes by selling power assets it bought for $2.8 bln. Despite the political storm and ownership limits, overseas bidders are interested. The falling ringgit, and 1MDB’s need to justify past deals, may give them the upper hand.

Nuclear waste contaminates E.ON breakup plans

10 Sep 2015

The stricken German utility’s attempt to free itself from the burden of dismantling its nuclear power plants has failed. E.ON will only hive off fossil assets and energy trading. Shareholders remain exposed to the risk that long-term cleanup costs may exceed group provisions. 

China carbon scheme another case of faulty markets

10 Sep 2015

It’s not just stocks and exchange rates that are proving hard to control. Seven pilot schemes for trading carbon dioxide emissions are floundering due to cheap permits, low liquidity and flexible deadlines. In this case, state intervention may be better than supply and demand.

Li Ka-shing’s power deal is a tidy-up too far

8 Sep 2015

The Hong Kong tycoon wants his CKI unit to buy the rest of $18 bln affiliate Power Assets. Li’s latest restructuring would create a simpler, cash-rich firm with lots of M&A opportunities. But the all-share, no premium tie-up doesn’t look great for Power investors.

Southern’s $12 bln deal could find true north

24 Aug 2015

The hefty 38 pct premium it’s paying for AGL looks rich for the utility sector. Though Southern isn’t giving a synergy figure, hacking out over 6 percent of costs would help justify the price. Previous mergers like Duke’s acquisition of Progress at least suggest it’s achievable.

Iberdrola’s American dream gets harder to realise

2 Jul 2015

The Spanish utility’s $3 bln takeover of listed U.S. peer UIL has been dissed by the Connecticut regulator. Iberdrola can probably offer concessions to get the deal done. But the costs of doing so risk making its attempt to crack the fragmented American market less attractive.

Alstom’s growth train has Chinese twist

6 May 2015

The French group’s focus on transport is paying off, with train orders up 10 pct and rising margins. But the merger of two larger Chinese rivals intensifies competition in Alstom’s global markets. Teaming up with Bombardier or Siemens may be its next destination.