Renewable Energy Update : Third Quarter 2011
Deloitte Financial Advisory Services
This quarter’s Renewable Energy Update, produced by Deloitte Financial Advisory Services, summarizes the most recent transactions along with information on the most active buyers, current transaction valuation multiples and an overview of the public market’s perception of the industry.
This quarter’s highlights
M&A activity in the renewable energy market has slightly decreased in Q3’11: Mergermarket reported 29 renewable energy deals in Europe for Q3’11 compared to 32 deals for Q2’11. Total disclosed deal value was €3.32 billion for Q3’11, compared to €8.38 billion for Q2’11 which was exceptionally high due to EDF’s purchase of the 50% it did not own yet in its renewable energy subsidiary, EDF Energies Nouvelles, for an enterprise value of €5.9 billion. As of today, M&A activity has been much more active compared to 2010 with already more deals recorded after three quarters than the total year 2010. The important activity indicates a move towards industry consolidation highlighted by the recent delisting of EDF Energies Nouvelles and Iberdrola Renovables following the acquisition of the remaining shares by their mother companies EDF SA and Iberdrola SA.
Stock quotes of the NEX plummeted in Q3’11 following the significant decrease in Q2’11, plunging the index on October 3 2011 to its lowest level since 2003. If the global economy suffered in Q3’11, the NEX Index was especially hit as it underperformed the DJ Euro Stoxx 50 by a wide margin at the end of the quarter. It reflects pessimism about the effect of cash-strapped government budgets on subsidies for clean energy around the world which largely rely on government supports, and pessimism about the ability of renewable energy manufacturers to protect their profit margins.
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