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Power Deals2010 AnnualReview

Mergers and acquisitionsactivity within the global power and gasutility market

www.pwc.com/powerdeals

Introduction 2

Report highlights 3

Deal totals: values pick up 5

Deal makers: the 2010 power players 9

Deal places: a focus on markets worldwide 13

North America 15

Europe 17

Asia Pacific 19

Looking ahead 21

Contacts 22

Contents

1 Power Deals Annual Review 2010

Methodology and terminology

Power Deals includes analysis of all global cross-border and domestic power and gasutility deal activity. It is the latest in our Power Deals annual series. We include dealsinvolving power generation, transmission and distribution; natural gas transmission,distribution and storage; and energy retail. Deals involving operations upstream ofthese activities, including upstream gas exploration and production, are excluded.Renewable deals are covered in our sister publication, Renewables Deals and thereforeexcluded. The analysis is based on published transactions from the Dealogic ‘M&AGlobal database’ for all power and gas utility deals. It encompasses announced deals,including those pending financial and legal closure, and those which are completed.Deal values are the consideration value announced or reported including anyassumption of debt and liabilities. Throughout the report, the Russian Federation istreated as a geographic entity in its own right. We have considered Asia Pacific as aregion including Australasia, except where otherwise explicitly stated. All presentednumbers of deals are inclusive of those deals with no reported value, unless specified.

IntroductionThe deal doldrums of 2009 and early 2010 were gradually replaced by a modest deal uplift during the course of the year. While Europeancompanies mostly lowered their acquisition sights, focusing on smallerdeals than in previous years, deal values were boosted by a bounce-backin US deal activity. In last year’s Power Deals we predicted the ending ofthe deal stalemate in the US and we have seen that translated into arenewed US deal flow that looks set to continue into 2011.

Power Deals 2010 reviews deal activityin the power and gas utilities sectors.The report is the latest review in ourannual series on deal-making. Itexamines activity in all parts of thesector except for renewables.

In our companion report, RenewablesDeals 2010, we separately look at thetrends and dynamics in the renewablesector. Together the two reportsprovide a comprehensive globalanalysis of M&A activity across theentire power and gas utilities sector.

This report examines the rationalebehind the overall trends and the keyindividual deals. We take a look backat 2010 and look ahead into 2011. In aseries of ‘2011 views’ we considersome of the main developments thatwill influence power deals in the yearahead. We also highlight, in a series ofdeal dialogues throughout the report,some of the critical issues for

companies engaging in deal activitywithin the sector, drawing on ourglobal experience as an adviser toplayers in major deals in all key powerand gas utility markets.

Looking ahead, we anticipate that therevival in power deal values willcontinue. The reaction to date of USregulators to the 2010 announceddeals suggests that the door is nowmore open to a greater flow ofregulated utility deals in the US ascompanies scale up to deliver renewaland expansion programmes.

In Europe, network asset divestmentswill continue for similar balance sheetreasons. Leading European companieswill also be weighing up moves to stepup their international presence ingrowth markets. We also expect to seea continuation of outbound Chineseand Asia Pacific investment in Europe,the US and other regions in 2011.

Power Deals Annual Review 2010 2

Manfred Wiegand Global Utilities Leader

Report highlights

Deal values pick up off the floor

Deal values appear set on an upwardtrajectory from the lows reached in2009. Total deal value in the power andgas utility sectors, excludingrenewables, was up 19% year-on-year,from US$98bn in 2009 to US$116bn in2010. Forward deal momentum, asevidenced by rising quarterly valuetotals for deal announcements, hasrisen from around US$20bn per quarterin late 2009/early 2010 to aroundUS$40bn as we move into 2011. Thiscompares with quarterly volume thatwas typically in the US$60-80bn rangein 2007 and US$30-50bn in 2008.


The dam bursts on US pent-up deal demand

Deal activity in North America, almostentirely in the US, bounced back in 2010after an exceptionally subdued previousyear. Total power deal value in the regionmore than trebled. The average deal valuefor North American targets was up 76%from US$246m in 2009 to US$432m. Thevast majority of purchases were made byNorth American buyers – US$32bn of theUS$34bn total – and most of this activitycame from corporate buyers from withinthe power sector. After a period whensome blockbuster announced deals wereunable to clear regulatory hurdles, a morefavourable market, funding and regulatoryenvironment is encouraging the release ofpent-up deal demand.


Chinese and Asia Pacificbuyers move worldwide

Asia Pacific bidders were involved inUS$25bn worth of deals, nearly a fifth ofall power deal activity worldwide and up35% on the previous year. The number ofdeals with Asia Pacific buyers or sellerswas little changed. But the focus ofactivity switched to encompass moreinvestment in targets outside the region.US$10bn of Asia Pacific bidder value wasfor targets outside the region. We expectthis trend to continue to assert itselfstrongly in 2011. Scaling foothills rather

than new peaks in 2011

Power deals remain in the lowlandscompared with the heady mountains ofdeal value that were transacted in the2005-2008 period. But the conditions arein place for a return at least towards thefoothills of those peaks. Globalisation ofthe power sector is moving forward on anumber of fronts with companies lookingat gaining greater presence in growthmarkets, strong international interest ininfrastructure assets and signs of greaterChinese involvement, not just from gridcompanies but also generators. The USdeal environment looks much morepositive. And, while privatisation has beentaken off the agenda in Australia, thesecond round of state sell-offs in Turkeylook set to boost 2011 deal totals.


There was a much stronger focus ondomestic deal activity in 2010. Domesticdeals, boosted by a flow of USconsolidations (see Deal Makers and NorthAmerica sections), accounted for 80% ofall power deals and 69% of total value in2010. This continued a trend alreadyevident the previous year when thenumber of cross-border deals had declinedsignificantly.

Deal-making is picking up from the low reached in 2009. Totaldeal value in the power and gas utilities sector (excludingrenewables) was up 19% year-on-year, from US$98bn in 2009 toUS$116bn in 2010 (figure 1). Deal numbers showed a similarlift with the total rising from 596 to 670. But average deal valuewas little changed with the bulk of deal activity continuing tofocus on smaller deals.

Deal totals: values pick up

In contrast, total deal numbers arerelatively buoyant. The total of 670electricity and gas deals in 2010 is in asimilar bracket to the 623 and 768recorded in the peak M&A years of 2006and 2007. The difference, of course, is theabsence of the huge mega deals thatcharacterised those years when bigconsolidation in Europe, Europeanacquisitions in the US and restructuring inRussia delivered a series of deals withvalues of tens of billions of dollars. In2007, for example, US$182bn of the all-time record US$373bn was accounted forby the ten largest deals alone.

Source: PwC, Power Deals 2010 Annual Review

Power

Gas

of which: Electricity

Figure 1: Total sector deal activity – 2009 and 2010

2009 2010 Change in 2010Number Value Number Value % number % value

497 US$88.9bn 573 US$103.7bn 15% 17%

99 US$8.7bn 97 US$12.3bn (2%) 43%

596 US$97.6bn 670 US$116.0bn 12% 19%


Domestic deals


2003

2004

Cross-border deals

Figure 2: All electricity and gas deals by value (US$bn)

2005

2006

2007

US$bn20 40 60 80 100

120

140

160

180

200

220

240

260

280

300

320

340

360

380

2008

2009

2010 36 80 116

47 51 98

74 121 195

143 230 373

136 163 299

56 140 196

58 66 124

17 26 43

2010 review…

…After seeing quarterly deal flow fall to a low of aroundUS$20bn, volume picked up in the second half of 2010 toaround US$40bn...

2011 view…

…We believe the conditions are in place for this revival to continuein 2011 and the trend to remain upward. A flow of further USconsolidations, network divestments in Europe and continuedoutbound and inbound Asia Pacific deal appetite are set to keeptotals buoyant in 2011 although stopping short of the accelerationneeded to begin to revisit the totals of the mid-part of the lastdecade.



38.6

20.517.8

20.7

160

205

163

142

15.0

20.6

38.641.8


Figure 4: Quarterly tracking of deals – 2009 and 2010

By value (US$bn) By number

50

100

150

200

250

113

172153 158

Q4Q3Q2Q1

10

20

30

40

50

Q4Q3Q2Q1 Q4Q3Q2Q1 Q4Q3Q2Q1

2009 2010 2009 2010

In 2010, total cross-border deal value fell24% year-on-year from US$47bn toUS$36bn with deal numbers broadly level – 133 compared with 128 in 2009.Significantly, the largest cross-border dealswere exits as companies, including EDFand E.ON, sold off parts of theirinternational portfolios (see ps 9-10).

Figure 3: Cross-border and domestic deals – 2009 and 2010

2009 2010Number Value % number % value Number Value % number % value

Domestic 468 US$50.6bn 79% 52% 537 US$80.1bn 80% 69%

Cross-border 128 US$47.0bn 21% 48% 133 US$35.9bn 20% 31%

Total 596 US$97.6bn 100% 100% 670 US$116.0bn 100% 100%

Our quarterly analysis of power dealactivity during 2010 shows a rebound indeal value as announcements of largerdeals begin to gather pace. Deal value haddipped to a trend line around US$20bn perquarter for much of 2009 and the first halfof 2010. But the second half of 2010 sawquarterly value rise significantly to aroundthe US$40bn mark. This compares withquarterly volume that was typically in theUS$60-80bn range in 2007 and US$30-50bn in 2008.


Maximising network asset deal value

Deals for network assets are valuedrelative to the regulated asset base.Sellers can gain the maximum regulatedasset base (RAB) multiple by removingrisk and uncertainty that could have anegative impact on deal value.

PwC can help utility companiesunderstand and model the impact ofseparation scenarios. Once a decision todivest is made, we can work withmanagement to develop and implementdetailed separation plans across allfunctional areas.

By offering robust planning for theparties to a transaction, deals canrequire minimal due diligence – enablingthe process to be quick, with nosurprises and no value erosion duringnegotiations.

Enhancing value

PwC recently helped a vendor to achievea 130% RAB multiple. We assistedmanagement to:

• prepare a clear set of bidder deliverables, which quantified the financial and addressed the operational impacts of different separation scenarios

• prepare a robust and transparent separation plan, which gave confidence to bidders and enhanced deal value

• identify transitional and long term service agreements required on both sides

• identify and quantify the stranded costs arising on separation for the seller

• develop a structured, fact based approach to employment issues, which took the emotion out of a complex process

• maintain a low risk approach – where possible transfer of existing assets and people rather than build or recruit

• establish a robust governance structure with clearly defined separation principles.

Delivering value

From our experience of working ontransactions involving majorseparation programmes, managementteams need to focus on the followingareas to minimise disruption andmaximise value:

• challenge the assumption that nothing needed to change – rigorous assessment of transitional services highlighted a significant number of detailed changes required pre-day 1

• agree the detailed transition plan with the buyer and deliver against joint plans – getting the buyer up to speed quickly with the level of planning undertaken and their responsibilities

• maintain a rigorous change control process based on statements of fact not negotiation

• address the culture change early – communications reinforced that staff continued to be employed by the seller until completion

• adopt a robust approach to identifying and obtaining consent from third-party suppliers

• complete joint post-completion plans with the buyer within 40 days post-completion to drive the full standalone state

• ensure a balance of separation activity and business as usual – protecting the core business while maximising deal proceeds

• use separation as the driver of optimisation in the seller’s retained business – mitigation strategies for stranded costs developed and implemented on a timely basis

• ensure migration and transition services agreement (TSA) readiness plans are embedded pre-completion to deliver a smooth transition.

The flow of network asset divestments is increasing. The value that vendors get fromsuch deals can be boosted by early detailed planning and preparation work.Separation of networks is potentially highly complex. By preparing a credible anddeliverable separation plan, the sale is made more attractive to buyers and dealvalue is maximised.


Relatively low premiums characterisedmany of these deals, reflecting their‘merger of equals’ nature. They aremotivated by a mutual interest of bothparties to merge contiguous coreoperations and gain greater scale andbalance sheet strength for investment. Welook in more detail at the various US dealsand related developments in the US powermarket in the North America section.

The E.ON auction of Louisville Gas andElectric and Kentucky Utilities marked theGerman company’s exit from the USregulated power supply sector. It retains itsfocus on growth in renewables in the US.E.ON is engaged in a series of asset sales asit plans to refocus its internationalfootprint towards faster growth markets.Expansion outside Europe was also themotivation behind the merger betweenInternational Power (IP) and GDF-Suez,which at US$13.5bn was the largestannounced deal in 2010. The twocompanies have complementary globalindependent power businesses and thedeal strengthens IP’s credit rating giving itimproved access to capital. Announcingcompletion of the deal in February 2011,the merged group says it is “ideallypositioned in the regions where 80% oftomorrow’s new production capacitiesneeds will occur.”

Positioning for expansion in growth markets, selling assets tofund power generation and infrastructure investments,international investor interest in steady regulated utilityreturns, and power privatisation in Australia and Turkey wereall part of the backdrop behind the largest deals of 2010. But thebig story behind the top deals was the arrival of a long-predictedwave of consolidation deals in the United States.

Deal makers: the 2010 power players

No fewer than five of the top ten 2010power deals were US combinations. Forsome time, the power sector in the US hasappeared ripe for consolidation with alarge number of medium-size power andutilities companies. There had been pent-up demand for deals and 2010 saw thedam burst. With companies facing majorcapital investment challenges, the need forgreater scale and balance sheet strengthhad become pressing. These factors willcontinue to provide momentum behindfurther similar US consolidation moves in 2011.

Some of the 2010 deals – AlleghenyEnergy/FirstEnergy, E.ON/PPL andDynegy’s pursuit by Blackstone and thenby Icahn – had their own distinctivecontexts that did not necessarily indicatethe trend that was to come. But thecombination of two merchant independentpower producers, Mirant Corporation andRRI Energy to form GenOn Energy,followed later in the year by theagreements between NSTAR/NortheastUtilities and Nicor/AGL, provided a trio ofdeals with consolidation for mutualefficiency and scale at their heart. Then, inthe first few weeks of 2011, came theblockbuster with the announcement of aUS$13.7bn merger between Duke Energyand Progress Energy.


The third largest deal in 2010 was a moveaway from international ownership whenthe southern German state of Baden-Wuerttemberg bought EDF’s 45%stake in Energie Baden-Wuerttemberg(EnBW). A degree of energy nationalismlay behind the public takeover with thestate premier stating that the purchase had prevented foreign buyers frompossibly acquiring a majority stake in thecompany. The state intends to sell all orpart of its share again at a future date. The US$6.4bn divestment by EDF added to the US$9.1bn from the sale of its UKnetworks business to Cheung KongInfrastructure of Hong Kong.

These asset sales have helped EDF cut debtand free up funds for substantial nuclearpower and other infrastructure expansion.

We look further at the dynamics behindthese European and US deals in the Europeand North America sections later in thereport. The remaining top ten deals of2010 came with energy privatisation inAustralia. In addition, there were theprivatisation auctions in Turkey of 11 ofthe country’s 20 regional electricitydistribution companies. We discuss thesedeals in the Asia Pacific and Europesections.

No. Value of Date Target name Target description Target nation Acquirer name Acquirer transaction announced nation(US$bn)

Deal values for numbers 2, 3, 7 and 9 are sourced from Capital IQSource: PwC, Power Deals 2010 Annual Review

Figure 5: Top ten – cross-border and domestic deals 2010

13.5

9.1

6.4

5.5

5.0

4.3

3.2

2.9

2.0

2.0

10 Aug 10

30 Jul 10

06 Dec 10

11 Feb 10

28 Apr 10

18 Oct 10

14 Dec 10

15 Dec 10

14 Dec 10

11 Apr 10

International Power plc

EDF Energy plc

Energie Baden-Wuerttemberg AG - EnBW

Allegheny Energy Inc

E.ON US LLC

Nstar

Country Energy;Integral Energy Australia

Dynegy Inc

Energy Australia

Mirant Corp

United Kingdom

United Kingdom

Germany

United States

United States

United States

Australia

United States

Australia

United States

GDF Suez SA

Cheung Kong Infrastructure Holdings Ltd (40%)Hongkong Electric Holdings Ltd (40%)Li Ka-Shing Foundation (20%)

Federal State of Baden-Wuerttemberg

FirstEnergy Corp

PPL Corp

Northeast Utilities

Origin Energy Ltd

Icahn Enterprises LP

CLP Holdings Ltd

RRI Energy Inc

France

Hong Kong

Germany

United States

United States

United States

Australia

United States

Hong Kong

United States

1

2

3

4

5

6

7

8

9

10

Global independent powerproducer, headquartered inthe UK

UK electricity distributionbusiness

Local energy conglomerate

Diversified domestic utilityholding company

E.ON’s US power generationbusiness

Investor-owned domesticelectricity and gas utility

Portfolio of domesticelectricity & gas retailbusinesses and generationtrading rights

Domestic independent powerproducer

Domestic electricity & gasretail business and generationtrading rights

Domestic independent powerproducer


Corporate vs financial buyersCorporate activity by trade playersaccounted for just half of all power dealvalue in 2010. Financial and other buyersaccounted for US$56bn of deal value,although US$6.4bn of this is representedby the inclusion of the state of Baden-Wuerttemberg’s deal with EDF in the‘other’ category.

Financial & other


2003

2004

Utilities

Figure 6: Utility deal activity vs financial & other deal activity by value (US$bn)

2005

2006

2007

US$bn20 40 60 80 100

120

140

160

180

200

220

240

260

280

300

320

340

360

380

2008

2009

2010 11660 56

9870 28

147

289

247

169

81

26

48

84

52

27

43

17

195

373

299

196

124

43

The Cheung Kong/EDF UK networks,Icahn/Dynegy and the Turkish investorpurchases in the Turkey electricityprivatisations together accounted foranother US$15bn of ‘financial and other’bid activity. This category also includespurchases by energy companies with oiland gas exploration activities who aremoving into power distribution, such asthe US$3.2bn purchase by Australia’sOrigin Energy of electricity and gas supplybusinesses in the first round of New SouthWales electricity privatisation (see AsiaPacific section).


Figure 7: Utility deals activity vs financial and other deal activity (% share)

2003 2004 2005 2006 2007 2008 2009 2010

Utilities 60% 65% 86% 83% 78% 76% 71% 52%Financial and other 40% 35% 14% 17% 22% 24% 29% 48%


The remaining US$1bn plus deal involvingfinancial buyers stemmed from therestructuring of Alinta Energy in Australiawith a debt for equity swap required toavoid voluntary administration. The groupof lenders included private equity companyTPG Capital. Other significant financialbuyer deals included a US$843m openmarket purchase of a 3% stake in Iberdrolaby Blackrock.

Most active biddersThe relatively subdued buyer activity ofutilities companies in the major westerndeveloped markets is reflected in theirabsence from the most active bidderstable. Instead, Donalink, a Cyprus-registered company controlled by Russianbillionaires Andrey Melnichenko andSergei Popov, was the most active in 2010with a string of acquisitions of largelyminority stakes in local Russian electricitygeneration and distribution companies,totalling US$349m. The largest Russiantransaction was metals group NorilskNickel’s US$1.5bn divestment of acontrolling stake in power generationplants to Russian electricity export andimport company Inter RAO. The dealremained subject to completion at the endof 2010.

Number Total value Rank Bidder of deals US$m


Figure 8: The five most active bidders 2010

1

2

3

4

5

Donalink Ltd

Gazprom OAO

Inter RAO UES OAO

Huadian Energy Co Ltd

RusHydro

349.4

n/a

1,996.5

217.1

97.5

8

6

5

5

5

2010 review…

…Transaction values for regulated assets have generally remained fairlyrobust during the recent downturn, an example of this being the 130% RABmultiples achieved by EDF in the disposal of their network business duringthe year. By contrast, prices for assets exposed to underlying commodity anddemand side risk remain somewhat depressed. In addition, further trendsseen in 2010 include evidence of further globalisation of the power sectorwith the growth of the independent power producer business model,purchases by Cheung Kong Infrastructure (CKI) and State Grid Corporationof China of network assets in the UK and Brazil respectively, and E.ON’soutline of its growth plans outside Europe…

2011 view…

…We expect these trends to intensify in 2011, especiallythe trend of divestment of network assets. The stablesource of return on invested capital is attractive tospecialised infrastructure investors such as CKI andinvestment funds such as those linked with globalinvestment banks. There is likely to be a string of deals forsuch assets in Europe. Press reports, for example, indicatethat CKI is expected to make a bid for E.ON’s UKnetworks.

Figure 9: Deals by continent


North America 2009 2010 % change

By target value of deals (US$bn) 12.3 32.8 167%

By bidder value of deals (US$bn) 10.0 34.0 240%

Number of deals

By target 96 110 15%

By bidder 84 118 40%

South & Central America 2009 2010 % change

By target value of deals (US$bn) 8.6 3.4 (60%)

By bidder value of deals (US$bn) 7.8 1.5 (81%)

Number of deals

By target 32 39 22%

By bidder 28 30 7%

Europe continues to provide the main power deals focus –delivering the majority (51%) of the target value of worldwidepower deals. But the European bidder focus shifted in 2010.Although the number of European deals (both bidder andtarget) maintained its share of world deals, European biddervalue declined by 14% year-on-year and Europe’s bidder shareof worldwide deal value fell from 60% to 44%.

Deal places: a focus on markets worldwide

US activity took up the slack. Coming off alow base of very subdued activity in 2009,the number of bids by North Americanentities rose 40% in 2010 with total biddervalue more than trebling, up to US$34bnfrom US$10bn. North American targetsaccounted for 28% of total worldwide dealvalue – nearly three times their 13% shareof 2009. But the US$33bn target value for2010 is still significantly short of NorthAmerican power deal totals in the mid-partof the last decade which ranged fromUS$58bn in 2004 to a high of US$95bn in2007 and then down to US$42bn in 2008.

A big fall-off in deal value came in SouthAmerica where both target and biddervalue returned back to levels comparablewith 2008 after a big rise in 2009.US$1.2bn of the US$3.4bn SouthAmerican target value came from thetakeover of seven Brazilian powertransmission companies by the State GridCorporation of China (see later Asia Pacificsection). Elsewhere, deal value rose in theRussian Federation after a big fall in 2009.Much of this came from buyer activity byDonalink and Inter RAO (see p 12).


Figure 10: 2010 deal percentages by continent (2009 percentages shown in parenthesis)

By target

Europe 51% (60%)

Asia Pacific 14% (16%)

North America 28% (13%)

South & Central America 3% (9%)


Russian Federation 4% (2%)

By bidder

Europe 44% (60%)

Asia Pacific 21% (16%)

North America 29% (13%)

South & Central America 1% (8%)

Russian Federation 4% (2%)

Middle East 1% (1%)


Europe 2009 2010 % change


By bidder value of deals (US$bn) 58.9 50.7 (14%)

Number of deals

By target 167 190 14%

By bidder 174 190 9%

Russian Federation 2009 2010 % change



Number of deals

By target 131 158 21%

By bidder 133 153 15%

Asia Pacific 2009 2010 % change

By target value of deals (US$bn) 16.0 15.7 (2%)


Number of deals

By target 163 160 (2%)

By bidder 171 170 (1%)

The total value of Asia Pacific targetsstayed broadly level year-on-year, buoyedby the Australian privatisation sales. Butwhile Asia Pacific target value was littlechanged, the total value targeted by AsiaPacific bidders was up 35%, from US$19bnin 2009 to US$25bn in 2010. Between athird and a half (US$10bn) of this was fortargets outside the Asia Pacific region,predominantly in North America andEurope.


In 2010, these inhibiting factors becameoutweighed by the greater certainty that,whatever the exact form of energy reformand economic recovery, major generationand infrastructure investment would berequired and companies needed to startdoing deals to gain scale, strengthenbalance sheets and improve capital ratings.

The largest deal announced in 2010 wasFirstEnergy Corporation’s US$5.5bn all-stock takeover of Allegheny Energy. The two companies, based in neighbouringOhio and Pennsylvania, have operationalfootprints with more than six millioncustomers across seven states and a lot ofopportunities for synergies. Reflecting this,the deal carried a 32% premium toAllegheny’s closing share price before theannouncement.

Deal activity in North America bounced back in 2010 after anexceptionally subdued previous year. The region’s target andbidder value both more than trebled. The number of biddersfrom within the region rose by 40% and the average deal valuefor North American targets was up 76% from US$246m in 2009to US$432m. Nearly all deals were for US targets – 100 of the110 deals. The ten deals for Canadian targets were relativelysmall, accounting for US$127m of the total US$33bn totaltarget value.

North America

The vast majority of purchases were madeby North American buyers – US$32bn ofthe US$34bn total – and most of thisactivity came from corporate buyers fromwithin the power sector. There had been alot of pent-up pressure with uncertaintiesaround energy legislation and difficultiesin regulatory approvals among the factorsholding deals back. The economicsituation and negative demand growth formany utility companies had alsodampened companies’ appetite for deals.



Figure 11: North America deals by target

% change in 2010

Value Number Value Number

Power US$32.8bn 110 167% 15%

of which: Electricity US$26.4bn 89 116% (3%)

Gas US$6.5bn 21 6350% 425%

Previous years had seen a string ofproposed deals that have ended up beingblocked by state regulators. Theseincluded, for example, FPL’s abandonedtakeover of Constellation which fell on theuncertainty around approval by theMaryland Public Service Commission(MPSC). But, early in 2011 the Alleghenydeal was on course for clearance withMPSC becoming the third of four states toapprove the combination. The deal hasalso gained federal regulatory approval.

Pennsylvania-based PPL with its US$5.0bnauction win for Louisville Gas and Electricand Kentucky Utilities from E.ON. TheGerman company had decided to sell itsnon-renewable US assets in favour ofrefocusing its international ambition onfaster growth markets elsewhere. The dealcompleted before the end of 2010.

Also announced and completed in 2010was the US$2.0bn merger of independentpower producers, Mirant Corporation andRRI Energy, to form GenOn. Like theirpublic utility cousins, combinations ofmerchant power companies are adevelopment that has been waiting tohappen in the US market and, indeed, thetwo companies had been in discussions forsome time.


Another merchant power company,Dynegy, provided many of the 2010 powerdeal headlines in the US. Its market pricehad slumped and the Blackstone Grouppursued a buy-out that would haveenabled them to break up and resell someof the generation assets. The bid fell in theface of shareholder activism led by hedgefund Seneca Capital and Icahn thentabling a higher priced proposal. With noalternative bids having been received bythe company at the closing of its ‘openstrategic alternatives process’ on 24January 2011, the US$2.9bn Icahn offerhas been recommended by Dynegy’s board.

With the deal-making momentum in theUS power sector already beginning torevive, the second half of 2010 and thefirst month of 2011 heralded a trio ofmergers in the regulated utility sector tomore than match the Mirant/RRI andDynegy activity in the unregulated arena.Northeast Utilities’ US$4.3bn merger withNstar and AGL Resources US$2.0bnmerger with Nicor were followed by theannouncement of a US$13.7bn agreementbetween Duke Energy and ProgressEnergy.

The Duke Energy deal is set to create thelargest power utility in the US. The twocompanies have contiguous footprintsserving seven million electric customers insix regulated service territories NorthCarolina, South Carolina, Florida, Indiana,Kentucky and Ohio. The AGL/Nicormerger, if approved, will create the largestsystem of affiliated natural gas-onlydistribution companies in the US, servingaround five million customers.

All three deals are subject to regulatoryclearance which, as we have noted, hasbeen an obstacle to US deals in the past.However, the outlook appears morepositive and the logic of greater scale to beable to undertake the significant capitalinvestment needed in the sector will be afactor in regulators’ minds. NortheastUtilities and Nstar, for example, have plansto invest US$9bn in energy infrastructurein their New England service territory overthe next five years. The merger is designedto make investment more cost effective,spread it over a larger customer base andallow investments on a scale that mightnot be possible for the companies on astand-alone basis.

Against a background of the gas glut andlow wholesale gas prices, there was arevival of gas deals as acquirers saw buyingopportunities. But the biggest gas dealscame with the AGL/Nicor merger andIberdrola USA’s US$897m sale of three gasutilities to diversified energy company UILHoldings. The sale forms part ofIberdrola’s non-core asset divestmentprogramme as the Spanish-led groupfocuses on investment in and expansion ofrenewable electricity.

2010 review…

…The state regulatory reaction to proposed deals hasproved a deal breaker to many US deals in the past. Butthe prospects for completion of the 2010 announcementsare looking good as companies take a ‘merger of equals’approach...

2011 view…

…2011 began with a bang with Duke's acquisition of Progress, suggesting M&A maybe returning to levels last seen before 2008. Regulatory approvals for dealsannounced in 2010 will be a key influence on buyer appetite for an increased flow ofregulated transactions. The trend toward lower premiums suggests that ‘mergers ofequals’ may be an avenue for utilities to secure cost reduction opportunities, balancefuel risk in light of continued uncertainty around the carbon regime and gain scale foroncoming capital requirements. There is also strong interest in the US market fromfinancial buyers including sovereign wealth, pension and infrastructure funds.

Note: Excluding Russian FederationSource: PwC, Power Deals 2010 Annual Review

Figure 12: Europe deals by target

% change in 2010


Power US$59.5bn 190 2% 14%

of which: Electricity US$55.9bn 156 6% 24%

Gas US$3.6bn 34 (37%) (17%)


The development of a stronger footprint inhigher growth markets is also a keypriority for E.ON. The German utilitycompany set out its market strategy in late2010 stating that it intended to focus ontwo additional growth regions outsideEurope. No specific regions werementioned but Asia and the Middle Eastare likely to be high on the company’spriorities. But this is for the future. In2010, E.ON’s focus was on exits frompositions that did not fit with its strategy.This included non-renewable electricity inthe US where it raised US$5bn from thesale of utility companies that it hadinherited from its takeover of UK companyPowergen in 2002.

The number of European power deals rose in 2010 with bids upby 9% and deals for European targets up 14%. But activity waslargely confined to much smaller deal sizes than in previousyears. There were three exceptions – the InternationalPower/GDF Suez merger, the EnBW sale and the EDF sale of UKnetwork assets. Together they accounted for US$28bn of theUS$48bn total target value and US$56bn bidder total. But, evenwith the contribution of these three deals, European bidder value was down 14% year-on-year.

Europe

The big consolidation moves to gain astrong European footprint thatcharacterised deal-making in the mid-partof the last decade have given way to areview of portfolios and a number of dealsto raise cash for capital investment.International expansion outside Europeremains strongly on the agenda for anumber of European companies.

The declared ambition of InternationalPower (IP) and GDF Suez in theirUS$13.5bn deal is to create a global leaderin independent power generation withpresence in all major regions. The dealreinforces the group’s strength in leadingfast growing markets in Asia and theMiddle East and adds access to LatinAmerica for IP and to Australia for GDF Suez.

EDF is another company with majorexpansion plans, particularly in nuclearpower. The company is playing a majorrole in nuclear expansion following adisagreement with Constellation Energy.This led to EDF buying out the UScompany’s stake in their Unistar nuclearjoint venture in a US$162m deal. The factthat this was the largest acquisition by aEuropean company outside the continentindicates the extent to which actualoutbound deal flow was put on hold in2010 while companies reviewed theirpositions.

Low gas prices in the US market arefurther complicating EDF’s US plans byundermining the economics of nuclear. Forits UK plans alone, major investment willbe required and US$12bn was raised fromtwo sales in 2010 – the sale of EDF’s 45%stake in EnBW to the state of Baden-Wuerttemberg and the divestment of itsUK electricity distribution networks toCheung Kong Infrastructure and HongKong Electric. Iberdrola was anothercompany that was shuffling its portfolio in2010 with its US$897m sale of three USgas utilities (see North America).



The UK government is examining optionsfor electricity market reform in 2011.There are four policy instruments in thegovernment’s proposed package:

• carbon price support;• feed in Tariffs (FITs) with a contract for

difference (CfD);• an emissions performance standard;• a targeted capacity mechanism.

The new policies will lead to a significantchange in the functioning of the UK powermarket, and it is likely that much of Europewill introduce their own reform policies asthey also seek to decarbonise theirelectricity sectors.

Deal dialogues:Electricity market reform in Europe

2010 review…

…International expansion outside Europe was confined tothe boardroom planning table rather than the deal tableof European power companies in 2010…

2011 view…

…But this could change in 2011. IP and GDF Suez have indicated that their merger islikely to result in some initial rationalization of their combined portfolio followed byexpansion in key markets. Their combined firepower will also strengthen their ability toacquire assets worldwide. At the same time, E.ON could make the first moves in itsgrowth market strategy. Spanish utility Iberdrola may have set the tone for 2011 with itsJanuary 2011 US$2.4bn purchase of Brazilian electricity distribution company Elektro.

The aim is to improve the financialincentives for low carbon generation whilealso ensuring that there is sufficientprovision of flexibility to ‘keep the lightson’ as old fossil fuel plant isdecommissioned. It is recognised thatinterconnection and demand side responsealso have key roles.

With significant change comes a certainlevel of uncertainty over how futureelectricity markets will truly function inthe wake of reform. An increase ingovernment intervention is an unavoidableby-product of these policies, which maylead to unintended and unforeseeableconsequences.

One of the key aims of the market reformsproposed in the UK is to attract newinvestors such as financial investors withthe prospect of lower risk revenues. In theshort term, though, there is a real risk ofan investment hiatus as investors navigatethrough this transitional period.

Companies and investors will need tocarefully consider how these marketreform policies will impact their strategicobjectives and direction. They will need toconsider what it means both for theirstrategy and for the way in which theymanage their business. The best preparedcompanies will not only respond effectivelybut will be on the front foot to pro-activelyhelp shape the significant remaining gapsin the design of the reforms.

PwC has a deep-rooted understanding ofthe power sector across Europe and of theissues driving the current reforms. We canadvise companies to understand theimplications of market reform and assist inoptimising the response required, both ona strategic and operational level.

Security and affordability of supply have been the watchwords for electricity marketdesign across Europe. Now decarbonisation has added a third important objective.There is a growing awareness that current market structures cannot effectively deliverEU 2020 carbon emissions reduction targets. Reform of electricity markets is neededto address the objective of decarbonising the power sector while preserving theoriginal objectives of security of supply and affordability.

Network divestments are set to gather pacein 2011 with heavy buyer interest frominfrastructure funds and other financialinvestors. The unbundling and legalseparation of power transmission and gastransportation networks required by EUregulation is often leads to the divestmentof these separated entities. Activity is alsotaking place at the distribution systemoperator (DSO) network level.

There is also a trend to ‘recommunalisation’in Germany with a reinvigoration of the roleof the municipality-owned Stadtwerke multi-utility units and companies. The 2009US$4.1bn sale of Thüga by E.ON to amunicipal consortium, followed by the 2010EnBW purchase by the state of Baden-Wuerttemberg and the sale of Evonik SteagGmbH - Germany's fifth largest electricityproducer to the Rhein-Ruhr StadtwerkeConsortium (will be effective on 31 March2011), are indicative of this trend.

US$10bn of the US$60bn Europeantarget power deal value in 2010 camefrom Turkey where the privatisationauctions took place of 11 of Turkey’s 20regional electricity distributioncompanies. The largest deal was theUS$1.9bn acquisition of the Bogazicipower distribution grid, serving theEuropean half of Istanbul, by the Is-KayaInsaat-MMEKA investment consortium.MMEKA, one of the companies in theconsortium, was also successful in otherdeals, raising concerns about marketdominance. The Competition Authorityhas blocked the way for completion of allthe deals, unless potential legal actionoverturns this decision.



Figure 13: Asia Pacific deals by target

% change in 2010


Power US$15.7bn 160 4% 7%

of which: Electricity US$13.8bn 136 (4%) 10%

Gas US$1.9bn 24 170% (4%)

Inside the region, the long-awaited firstround of New South Wales (NSW)electricity privatisation in Australiaaccounted for the largest deals. Two dealsfeatured in the first round, announced inDecember 2010. In the first, Origin Energypaid US$3.2bn for Integral Energy andCountry Energy’s retail businesses and theEraring Energy GenTrader arrangements.The deal will increase Origin’s customerbase by more than 50%, making thecompany Australia’s largest energy retailerwith around five million customeraccounts and more than 5.8 GW ofcapacity, through either owned generationor contracted rights.

The Asia Pacific region delivered over a fifth (22%) of worldwidepower deal value in 2010. Bidders from the region were involvedin US$25bn worth of deals, up 35% on the previous year. Thenumber of deals with Asia Pacific buyers or sellers was littlechanged. But the focus of activity switched to encompass moreinvestment in targets outside the region. US$10bn of Asia Pacificbidder value was for targets outside the region. In contrast,despite the Australian privatisation deals, the total value oftargets inside the region remained relatively unchanged atapproximately US$16bn.

Asia Pacific

The swelling of deal volumes outside theregion was accounted for by the US$9.1bnCheung Kong Infrastructure purchase ofUK network assets (see earlier sections). Asecond significant international networksacquisition saw State Grid Corporation ofChina (SGCC) acquire majority stakes inseven power transmission companies inBrazil in a US$1.2bn deal.

The Brazilian purchase is the biggestoverseas investment by SGCC since it tookover the Philippines National TransmissionCorporation (TransCo) in January 2009.The deal gives it a platform for itsinternational operations in Latin Americaand is indicative of the company’s strategyof being a specialist operator of networkassets worldwide. Elsewhere, ChinaHuaneng Group announced the purchaseof Indian company GMR Infrastructure’s50% share of Dutch power generatorIntergen for US$790m, with the dealpending Chinese Government approval.

The second of the NSW privatisation dealswas a US$2.0bn purchase by TRUenergy(the Australian subsidiary of Hong Kong-based CLP Holdings) of EnergyAustralia'sretail business, the Delta Westerngentrader bundle for the Mount Piper (1.4 GW) and Wallerawang (1.0 GW) coal-fired power stations, and three powerstation development sites. Both theprivatisation deals are subject tocompletion. The deal doubles TRU’s energyretail business from 1.3 million toapproximately 2.8 million customers. Since the deals were announced, eightdirectors of state-owned electricitycompanies quit in protest, triggering aParliamentary inquiry into the sale. Theinquiry remains ongoing. A state electionwill take place in March 2011. Both TRUand Origin refute the ability of any newgovernment to reverse the sales.

The other major deal in 2010 came withthe need by Australia’s Alinta Energy todeleverage in the face of unmanageabledebt obligations. All the Alinta Groupoperating assets, other than Redbank andOakey1 generation plants, will be acquiredby a new company wholly owned by asyndicate of lenders. After the divestment,the syndicate loan will be partlydischarged. The total deal value isUS$1.3bn but is subject to a shareholdervote in March 2011.



2010 review…

…The New South Wales (NSW) privatisations boosted theAustralian power deal flow in 2010. But in early 2011 theprivatisation programme was stopped in its tracks…

2011 view…

… The privatisations have been the subject of considerable controversy. In early 2011,the NSW government abandoned any further privatisation of the state's electricitysector, after the second tranche of a planned sale failed to attract a suitable bid amidthe political wrangling. But with both debt and equity markets 'open for business'again, the outlook for other corporate deal flow in the sector looks positive, especiallywith some companies perhaps needing to divest stakes to finance extensive networkcapex requirements over the next few years.

These market dynamics have a number ofimplications for corporates. There is asignificant volume of deals, completed inthe mid to late part of the last decade,which have debt facilities with maturitydates fast approaching. Tighter debtmarket conditions, combined with anybusiness plan underperformance, means asignificant number of companies will beforced to enter restructuring negotiationswith their lending banks ahead of thesematurity dates.

Deal dialogues:Debt markets

A further tension is expected to come ascorporates and financial investors seek toincrease their level of M&A activity. Thiswill compete for attention from the samelending banks and debt markets, therebyadding a further pressure on companieslooking to refinance.

Despite this, there are some encouragingdevelopments. Leveraged finance isrecovering after the crisis of confidence in2009. Loan volumes grew in 2010 and areexpected to continue to grow in 2011 aslenders strengthen their balance sheets.But borrowers should plan to tackle theirupcoming maturities early to ensure thebest outcome is achieved.

The boom in global power deals during the mid-2000s was fueled to a significantdegree by high liquidity in the debt markets and favourable lending terms. The credit crunch resulted in a significant debt market tightening with lendingmultiples falling, margins increasing and covenants becoming more restrictive,directly impacting the prices that acquirers of these assets have been able to pay.Despite the debt markets showing some signs of improvement they remainchallenging as we move into 2011.

More highly leveraged companies need toconsider how they can reduce their debt tolevels capable of being refinanced in thecurrent market. In general, companies willhave to look forward and plan towardsupcoming refinancing rounds.

Combining our industry expertise withdeep debt market capability, PwC canadvise on refinancing strategies andoptions and assist with arranging andimplementing refinancings to ensure valueis maximised for our clients.

Looking ahead to 2011, the NSWprivatisations and the Alinta deleveragingare likely to have implications for furtherdeal activity. If their deals complete, bothprivatisation buyers will need tocontemplate a revised capital structure as aconsequence of the increased size of eachbusiness. This will likely see debt or equityissues at a future date. If approved, thegroup of lenders seeking to acquire Alintaincludes a private equity company whomay seek to strategically divest some of theportfolio of assets.


Power deal making remains in the lowlands compared with theheady mountains of deal value that were transacted in the 2005-2008 period. But the conditions are in place for a return atleast towards the foothills. Much will depend on the extent towhich demand returns in the main developed markets to givecompanies confidence in their capital expenditure renewal andnew build programmes.

Looking ahead

Deal flow in the US will hinge on the extentto which state regulators place hurdles inthe way of completion. The reaction ofregulators to the 2010 US deals suggeststhat the door is now more open to a greaterflow of regulated utility deals as companiesscale up to deliver the renewal andexpansion programmes that will berequired. However, this will remain a case-by-case, deal-by-deal factor which willinfluence who merges with whom and inwhich states.

US generation asset transactions continueto reflect the pent up demand that exists tosecure investments in the US from Asianinvestors, while other investors are trying tocapitalise on potentially undervalued assetsdue to regulatory uncertainty, particularlyin the environmental area. We expect anincrease in generation activity as legislativeand regulatory uncertainty continues,particularly around the price of carbon,driving opportunistic buying and fueldiversification.

It remains, for the most part, much moreeconomic for companies in the US to buyrather than build generation. But there isalso still considerable uncertainty aboutoptimal generation mix.

The recent discovery and exploitation of US shale gas formations has depressed gasprices compared to historical trends anddecoupled it from oil. In certain markets,this has changed the marginal fuels andadversely affected the economics forrenewable generation (both developmentand acquisitions).

Regulatory policy around drilling andextraction techniques are in their formativestages, creating uncertainty over the near tomid-term. However as shale gas continuesto build momentum, its impact on theglobal power markets is set to increase.

The central and eastern European dealmarketplace has been particularly hit by theeconomic downturn but 2011 looks morelikely to herald a deal growth story. InTurkey the long-awaited privatisation of thestate electricity generation portfolios is oncourse to begin in 2011 and proceed until2014. These transactions will switch 16 GWto private portfolios, pushing their currentshare of the installed capacity in thecountry from around 20% to some 50% inthe coming years.

Foreign bidders stayed away from therecent Turkish distribution tenders butgreater foreign interest is expected in thegeneration privatisations. But the opaqueregulatory scene does pose a question markfor outside investors. There is also thecoming privatisation of IGDAS, whichserves around five million customers inIstanbul. Here there is foreign interestalongside fierce domestic competition.

The trend towards global power deals, withcross continental acquisitions, will possiblystep up a gear in 2011. A number of trendsare evident – the development ofindependent power producer footprints,acquisitions of global network assetportfolios, outbound moves by Chinesepower companies and the expansionistplans of European utilities.

We expect to see a continuation ofoutbound Asia Pacific investment in Europe,the US and other regions in 2011, withgreater involvement of Chinese powercompanies, possibly from among thegeneration companies as well as the twogrid companies. 2011 could also be a yearof significant outbound activity byEuropean utility companies. But, as we say,the emphasis is likely to be on scalingfoothills rather than moving mountains.

If it does then we can expect promisingconditions for the divestment opportunitiesthat some companies will be seeking tobolster their balance sheet strength. InEurope the flow of network divestments islikely to accelerate, as companies seek tofree up capital. These are likely to continueto attract interest from sovereign wealth,infrastructure and pension funds.

For example, the UK Government hascreated a new class of asset in offshoretransmission operators with up to US$3.2bnof transactions expected to close in 2011,with more to follow in subsequent years. Byand large these deals allow infrastructurefunds to invest in such assets returning thecapital to their previous generatordevelopers. On the east coast of the US,there is the possibility that transmissioninvestment for offshore wind could comefrom unusual sources. Google hasannounced that it intends to team up withJapan’s Marubeni Corporation and GoodEnergy to finance a 350 mile stretch ofunderwater cable to connect 6 GW ofoffshore wind turbines with the coast. Butwhether this translates into reality remainsuncertain.

Government clean energy policies will playan important role in shaping thebackground to deal activity. This willincrease the extent to which the price ofpower assets and, in turn, M&A valuationsare determined by regulatory frameworks.The major capital expenditure andoperational priorities faced by companieswill reduce the scope for big acquisitionsbut, in turn, also spur smaller scalerestructuring.

Manfred WiegandGlobal Utilities LeaderTelephone: +49 201 438 1517Email: [email protected]

Mark HughesEuropean Energy & Utilities LeaderTelephone: +44 20 7804 5767Email: [email protected]

Ross HunterPartner, Energy & UtilitiesTelephone: +44 20 7804 4326Email: [email protected]

John GibbsPartner, Energy & UtilitiesTelephone: +44 20 7213 3800Email: [email protected]

Rob McCeneyPartner, Energy and Utilities Telephone: +1 917 968 6227Email: [email protected]

Charlie GarroodDirector, Energy & Utilities Telephone: +44 20 7803 5980Email: [email protected]

Ronan O’ReganDirector, Energy & UtilitiesTelephone: +44 20 7804 4259Email: [email protected]

Stefan GebskiEnergy & UtilitiesTelephone: +44 20 7804 8061Email: [email protected]

Olesya HatopGlobal Energy & Utilities MarketingTelephone: +49 201 438 1431Email: [email protected]

AustriaGerhard PrachnerTelephone: +43 1 501 88 1800Email: [email protected]

CanadaScott BoltonTelephone: +1 403 509 7502Email: [email protected]

Alistair BrydenTelephone: +1 403 509 7354Email: [email protected]

ChinaGavin ChuiTelephone: +86 10 6533 2188Email: [email protected]

DenmarkPer Timmermann Telephone: +45 3945 3945Email: [email protected]

FinlandMauri HätönenTelephone: +358 9 2280 1946 Email: [email protected]

France Philippe GiraultTelephone: +33 1 5657 8897Email: [email protected]

GermanyJörg BredyTelephone: +49 211 981 2852 Email: [email protected]

GreeceSocrates Leptis-BourgiTelephone: +30 210 687 4693Email: [email protected]

IndiaKameswara RaoTelephone: +9140 6624 6688Email: [email protected]

IrelandAnn O’ConnellTelephone: +353 1 792 8512Email: [email protected]

ItalyGiovanni PoggioTelephone: +39 06 570252588Email: [email protected]

Latin AmericaJorge BacherTelephone: +54 11 5811 6952Email: [email protected]

Global Power Deals Team Middle East

Paul NavratilTelephone: +973 1754 0554Email: [email protected]

NetherlandsJeroen van HoofTelephone: +31 88 792 1328Email: [email protected]

New ZealandCraig RiceTelephone: +64 9 355 8641Email: [email protected]

NorwayStåle Johansen Telephone: +47 9526 0476Email: [email protected]

PolandMiroslaw SoltysiakTelephone: +48 22 523 4710 Email: [email protected]

Russia & Central and Eastern EuropeDavid GrayTelephone: +7 495 967 6311Email: [email protected]

Alexander ChmelTelephone: +7 495 967 6334 Email: [email protected]

SingaporePaul CorneliusTelephone: +65 6236 3718Email: [email protected]

SpainGonzalo Sanchez MartinezTelephone: +34 946 022 534Email: [email protected]

SwedenMartin GaveliusTelephone: +46 8 5553 3529Email: [email protected]

SwitzerlandRalf SchlaepferTelephone: +41 58 792 1620Email: [email protected]

United KingdomSteve JenningsTelephone: +44 20 7802 1449Email: [email protected]

United StatesJohn McConomyTelephone: +1 267 330 2184Email: [email protected]


Territory Contacts

AfricaStanley SubramoneyTelephone: +27 11 797 4380Email: [email protected]

AustralasiaJock O’CallaghanTelephone: +61 3 8603 6137Email: [email protected]

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should notact upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express orimplied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law,PricewaterhouseCoopers does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone elseacting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2011 PwC. All rights reserved. Not for further distribution without the permission of PwC. “PwC” refers to the network of member firms ofPricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each memberfirm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients.PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professionaljudgment or bind them in any way. No member firm is responsible or liable for the acts or omissions of any other member firm nor can it controlthe exercise of another member firm’s professional judgment or bind another member firm or PwCIL in any way.

PwC firms provide industry-focused assurance, tax andadvisory services to enhance value for their clients. Morethan 161,000 people in 154 countries in firms across the PwCnetwork share their thinking, experience and solutions todevelop fresh perspectives and practical advice.

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