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Morgan Stanley leads utility M&A advisers in Q2'18

Editor's note: S&P Global Market Intelligence has reclassified industries according to the Global Industry Classification Standard. The league table data dispatch articles are now based on the new industry classification and are not comparable with 2017 and prior league table data dispatch articles.

Major merger and acquisition activity among utilities in the second quarter of 2018 focused on the aims of buyers to bolster their regulated holdings.

CenterPoint Energy Inc. on April 23 announced that it would acquire Vectren Corp. in a transaction valued at $8.13 billion. The combined energy holding company would serve more than 4 million natural gas utility customers and have an enterprise value of $27 billion.

The deal would help underpin gas demand for CenterPoint, analysts said, but would require the new parent company to take on the extra complication of managing power generation assets. The Houston-headquartered CenterPoint has for years been developing a broader reach, but the price of its Vectren acquisition — seen as "lofty" by one observer — could incite a credit crunch and possibly hamper its ability to deliver near-term growth.

Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC are serving as financial advisers to CenterPoint on the deal, with Akin Gump Strauss Hauer & Feld LLP and Bingham Greenebaum Doll LLP working as legal counsel. Bank of America Merrill Lynch is the financial adviser to Vectren, and Baker Botts LLP is legal counsel.

Another notable transaction from the second quarter was NextEra Energy Inc. on May 21 announcing that it would acquire Southern Co.'s Florida businesses and two generation assets for $6.48 billion, including the assumption of $1.3 billion of Gulf Power Co. debt. NextEra would also take on Southern's Florida City Gas, along with a 100% interest in the Oleander gas-fired power plant and a 65% interest in the Stanton gas plant.

While the transaction fits both companies' playbooks — NextEra growing regulated earnings in Florida, Southern addressing a multibillion-dollar equity need — some analysts were "astounded by the sky-high" premium paid for Gulf Power.

Bank of America Merrill Lynch and Goldman Sachs are serving as financial advisers to NextEra, with Wachtell Lipton Rosen & Katz and Skadden Arps Slate Meagher & Flom LLP & Affiliates working as legal counsel. Citigroup Global Markets Inc. is the financial adviser to Southern, and Jones Day and Troutman Sanders LLP are legal counsel.

Morgan Stanley was the top financial adviser for utility M&A in the second quarter of 2018, guiding six deals with a total transaction value of $24.3 billion. Coming in second was Goldman Sachs, with five deals and $15.51 billion in total transaction value. Rounding out the medal podium was Credit Suisse (USA) Inc., with five deals and $15.17 billion in total transaction value.

Among utility M&A legal advisers, Mayer Brown LLP and McGuire Woods LLP finished the second quarter tied in the top spot, both facilitating one deal with a total transaction value of $14.35 billion. Jones Day was in third with six deals and $8.56 billion in total transaction value.

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