Global nuclear energy mergers market: Deal value declines to $4.6 billion in Q4 2012

Press Release   •   Feb 22, 2013 14:24 GMT

The global nuclear energy mergers market saw the number of deals grow from 16 in Q3 2012 to 25 in Q4 2012. Despite this, total deal value actually decreased from the previous quarter, declining from $5.2 billion in Q3 2012 to $4.6 billion in Q4 2012. The main drivers from deal growth in Q4 2012 include a greater number of deals being brokered in North America. North America currently accounts for 44% of all deals in the global nuclear energy mergers market.

Asia-Pacific recorded a decrease with five deals in Q4 2012, down 29% from seven deals in Q3 2012. The uranium mining & processing sector registered 20 deals worth $629.9m in Q4 2012, as compared to 11 deals worth $462.8m in Q3 2012. Epangelo Mining's agreement to acquire 10% stake in Swakop Uranium, an uranium exploration company, for $209.5m; the agreement of Denison Mines to acquire JNR Resources for $10m; and Ibhubesi Capital's proposed acquisition of 67% interest in Mangalisa Project from Superior Mining International for $7.5m were some of the high-value asset transactions recorded in the uranium mining & processing sector in Q4 2012.

The increased number of M&As and asset transactions may not be indicative of bidders confidence in nuclear power. It is worth noting that the total M&A value has registered a decrease of 12% with $4.6 billion in Q4 2012, as compared to $5.2 billion in Q3 2012. NTPC is likely to keep its focus on thermal power as its interest to setup 2X700 MW reactors in a joint venture with NPCIL has diluted considering the uncertainty about nuclear future. The acquisition of 20% stake from Shaw Group Inc. will increase Toshiba's ownership in Westinghouse Electric to 87% making it easier for Toshiba to select nuclear projects on case to case basis. Barring two high value deals of over $1 billion each the remaining deals have contributed to just 13% with $ 0.6 billion. This reflects bidders' concerns in conducting any major asset transaction deals considering the criticalities involved in defining the scope of activities and gauge the return on Investment in nuclear industry.

Investments in nuclear energy companies, including new investments through equity/debt offerings and financings by PE/VC firms, recorded a decrease of 32% in deal value with $21 billion in Q4 2012, as compared to $30.6 billion in Q3 2012. However, the number of investments increased 19% from 113 deals in Q3 2012 to 134 deals in Q4 2012.

The majority of investments were in the form of debt, which reached $20.1 billion in Q4 2012, accounting for 96% of new investments in the nulear energy industry. Capital raising, through debt offerings, by companies in Europe registered a considerable decrease in the number of deals and deal values, with six deals worth $6.2 billion in Q4 2012, as compared to 13 deals worth $12.8 billion in Q3 2012. Global equity offerings, including initial public offerings (IPOs), secondary offerings, and private investment in public equities (PIPEs), registered a decrease of 43% in deal value from $1.6 billion in Q3 2012 to $932.5m in Q4 2012. However, the number of deals recorded a substantial increase of 46% from 71 in Q3 2012 to 104 in Q4 2012. Higher activity in Asia-Pacific and North America led to the increase with 58 and 41 deals respectively.

The decreased investments in Q4 can be attributed to high investment in Q3 which had registered an increase of 68% as compared to Q2. The new investment has witnessed a decrease of 32%, on the contrary, in terms of number of deals, a substantial increase of 46% has been registered as compared to the previous quarter which indicates indecisiveness of big investors to pursue nuclear power as a profitable sector due to market uncertainties.

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