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Breakingviews: Midwestern M&A restraint

Monday, June 23, 2014 - 02:42

Richard Beales and Christopher Swann run the rule over Wisconsin Energy's sober-looking $5.7 billion deal to buy overlapping utility Integrys.

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And I activity has exploded this year. It's even leaking into the usually save the world of them the midwest and United States Chris this utility minutes and other getting carried away. Well this is the thing yet she said that -- -- and a lot of -- very heady deals a lot of gigantic multiples that looks extraordinarily. Sensible. It's a Wisconsin Hannity and into Princeton if Clinton if you talk topped the figgins. All they really need is synergies about a hundred FA eighteen million a year. And utilities -- normally very coy about specified -- because it invites the regular -- a pass -- -- and specified yet. It invites to regulate us take some money away but then you write a scene it's not unrealistic to receive -- about amounts to about. 6% to net operating and maintenance budget right. -- doesn't he look it's a live the numbers of premium is 17% which is X. Not in any way -- registry and -- print exactly and in the pharmaceutical sector in silicon valley of the premiums recently have been. Fumble ambitious -- So as they'll talk about a merger of equals that's what the case it would it it's that deal back position with a premium but. Also quite often they have to give some of the citizens away right that it but there's room for that -- is that I think that's plenty of truth that even even if if if you look at have been recent. Synergies that have been achieved a cheap energy and progress is probably. The next -- they started out getting fat. Five to 7% right now operation which is right -- -- -- we we think these guys need to be right where we think they need to be but it looks as I'm gonna guess around 9% -- -- Recent estimates from the company in these guys do you have an awful lot of Nathan. Right so that that means that you go to get loyal they can give some to customers -- system yes. There's no doubt that the regulator long to chunk of -- they were wasting. And there's plenty of room in this premiums that -- shareholders to benefit and that's great pains to get something to. So this eloquence and will do well as they have the wonderful thing. We'll have taken illicit incriminate riveted together for -- we can do this and then they do great sensible deal and everybody's against you in the Aggies in the utility sector I think many -- detectives and naturally reluctant it's that's a lot of them will be in pieces that's more regulatory interference. It is a large headache. That as you say it that they may well have been stimulated -- the flurry of activity around. Some places do it sensible deal right we'll we'll leave that one that level breaking -- it --

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Breakingviews: Midwestern M&A restraint

Monday, June 23, 2014 - 02:42