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Management Mergers and Acquisitions
Veal summary
Acquirer: SSE
Target company: Airtricity
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Agreement: 4th January 2008
Completion: 15th February 2008
Strategic motivations for SSE, financial
advantages for Aitricity
utline
1. Internal and external strategic analysis
2. Integration challenges
3. Financial analysis
4. Price valuation
Analysis of the cleantech
market
Major Public
policies
Continued
Technological
progress => growth in
reduction of & ( energy
the initial cost demand
Vepletion of
oil and gas
=> Increase
of the prices
SWT analysis of the deal
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Reinforce its UK¶s leading Renewable energy is more
generator of electricity from
renewable energy expensive than fossil energy
Increase of its operating portfolio
of renewable energy
Strong expertise of Airtricity +! ! !
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Growing demand of renewable Many competitors
energies = > investment
opportunities thers companies interested in
Airtricity: E. , EVF, E I
Expansion of its activities in
Europe and Asia
Vifferences between the
companies
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! ! ! ,
Currency GBP Euro
Localisation Perth, UK Vublin, Ireland
Market(s) Viverse Renewable energy
generator
Vertical acquisition
Integration challenges
Management issues:
± Mix both management teams
Geographical issue
Viversification and brand issues:
± Airtricity vs. SSE Renewables
An integration crossing knowledge and
motivations
-
+! ! !
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¶s financial profil weakened after ! ! ! ,¶s
acquisiton(/, µs and ! )
downdraded share (natation AA-)
downgraded borrowing status
ĺstrain of SSE future interest payments
Reasons: -weakened CF of Airtricity
- Vebt financed deal
- Expensive purchase price? (SSE pays 700 times
earnings for Airtricity which made just 150,000£ for 2007)
Because of the lack of Airticity¶s CF and excessive purchase price
creditrating agencies doubt in SSE¶s financial profil and downgraded share¶s
notation.
M GBP
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$ 0
SALES 15256 25424 21550
Vividend/ 60,50 66,00 70,00
action(GBP)
1
2
/
$ $ $
Stock price 4,383 4,348 3,472
Finally after the acquisition stock price dropped
SSE's stock price
First approach: multiple of MW
¬ TRE V : Price/MW is increasing over years in wind sector
2nd approach: multiple of EBITVA
Average in the wind industry:
± EV/EBITVA in 2007= 18.7x
Source: Analyse des prix d¶acquisitions dans le secteur
éolien en Europe. Matthieu Guillard. Avril 2008.
EBITVA Airtricity in 2007: 85.2 m¼
Fair price: 18.7 * 85.2 ¼=1 590 m¼
Paid : 1 455 ¼
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Websites:
± Scottish & Southern to buy Irish windfarm firm, Jan 4, 2008
[Link]
± Crisis or not, renewable energy is hot, March 2009
[Link]
± Completion of acquisition of Airtricity Holdings Ltd, January 2008
[Link]
± [Link]
± [Link]
wind+up+Moody's.-a0173212042
± ."33(4 4 &3 ! 3! 5*$%$$6
78/,9 &, c !
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± [Link]
± ! ! ! , cc
:- #
ttp://[Link]/leadership/item/18743-airtricity-launches-sse-ren
Appendixes