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Electric utility acquisitions, IPP privatization account for Q3'17 biggest deals

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Electric utility acquisitions, IPP privatization account for Q3'17 biggest deals

Midstream deals slowed in the third quarter, but the power sector picked up the slack, with regulated electric utilities and independent power producers driving mergers and acquisitions activity.

Sempra Energy on Aug. 21 announced an agreement to acquire Energy Future Holdings Corp., or EFH, and its majority stake in Oncor Electric Delivery Co. LLC for $9.45 billion, with the transaction marking yet another attempt to acquire the Texas company since EFH filed for bankruptcy in 2014.

Reports of a third bidder emerged on Aug. 18 during a hearing in the U.S. Bankruptcy Court for the District of Delaware, with Sempra and Oncor going public with the deal several days later.

San Diego-headquartered Sempra on Oct. 5 filed for approval with the Federal Energy Regulatory Commission and the Public Utility Commission of Texas, two days after committing to dropping plans for a third-party investor in the deal.

Sempra executives, who had been eyeing Oncor since EFH's bankruptcy, told investors they have learned from the mistakes of previous bidders, including Hunt Consolidated Inc., NextEra Energy Inc., and Berkshire Hathaway Inc. subsidiary Berkshire Hathaway Energy.

Lazard Freres & Co. LLC and Morgan Stanley are acting as financial advisers to Sempra, with White & Case LLP serving as legal adviser. Barclays Capital Inc. is the financial adviser for Oncor, with four firms working as legal advisers.

Calpine Corp. plans to go private, announcing on Aug. 18 an agreement to sell itself to a consortium of investors led by Energy Capital Partners LLC, Access Industries and the Canada Pension Plan Investment Board for $5.57 billion in cash, plus debt assumption.

Energy Capital Partners and Calpine have filed an application for approval with FERC, and Calpine on Oct. 3 concluded its "go-shop" period with no offer to rival that of the investor group.

Calpine's intent to go private was hardly a secret, an option its management team viewed as one that could fetch premiums relative to where its equity price was valued in public markets.

Barclays Capital is acting as financial adviser to the investor group, with four firms serving as legal advisers. Lazard is the financial adviser for Calpine, with White & Case LLP and King & Spalding LLP working as legal advisers.

Hydro One Ltd. on July 19 announced an agreement to acquire Avista Corp. in a transaction valued at $5.3 billion, potentially establishing a network of 2 million utility customers in Ontario and the U.S. Pacific Northwest.

The companies in September asked regulators to approve their plan to merge across national boundaries with far-flung, noncontiguous service territories.

Moelis & Co. LLC is acting as financial adviser to Hydro One, with Bracewell LLP serving as legal adviser. Bank of America Merrill Lynch is the financial adviser for Avista, with Kirkland & Ellis LLP serving as legal adviser.

Barclays Capital is the top financial adviser for energy mergers and acquisitions as of the end of the third quarter, guiding 13 deals with a total transaction value of $64.05 billion. Coming in second is Morgan Stanley, with seven deals and $45.11 billion in total transaction value. Rounding out the medal podium is Lazard, with four deals and $40.35 billion in total transaction value.

Among energy M&A legal advisers, Skadden Arps Slate Meagher & Flom LLP & Affiliates remains in first place through the end of the third quarter, facilitating 19 deals with a total transaction value of $33.99 billion. White & Case is in second with four deals and $33.83 billion in total transaction value, and in third is Kirkland & Ellis with seven deals and $30.31 billion in total transaction value.

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