When M&As fail

US M&A activity plummeted in 2006, leading to fears that much-needed – but capital-intensive – infrastructure plans could be put on hold. Merging with infrastructure funds instead of private equity may be an easier way for utilities to jump some regulatory M&A hurdles, finds David Watkins

A drop in merger and acquisition (M&A) activity in the US utility sector last year has led to concerns that new infrastructure build may be stymied as smaller utilities struggle to raise the necessary capital.

The value of US electricity merger deals in 2006 sank 64% from 2005 levels to $20.7 billion, while the number of gas bidders fell by 31%, according to a report by management consultancy PricewaterhouseCoopers (PwC). In contrast, the same period saw $190.6 billion worth of deals in power and