The power sector saw merger and acquisition deals worth a combined $174.4 billion globally in 2011, a 16% growth vis-a-vis the previous year, according to a report.
According to PricewaterhouseCoopers' annual review of M&A deals in the global power sector, the total deal value in the power sector was up 16% from $150.5 billion in 2010 at $174.4 billion in 2011.
The number of deals went down to 583 in 2011 from 670 in the preceding year.
The report said deal values were boosted by the strong performance in the US and Asia-Pacific region.
Various reasons have been cited for consolidation in the sector. These included companies looking at gaining a larger presence in growth markets and strong international interest in infrastructure assets.
Deal activity in the Americas saw a surge in 2011, contributing $58 billion to total M&A activity.
Meanwhile, Asia-Pacific bidders were involved in $14.1 billion worth of deals last year. In addition, Asia-Pacific entities accounted for the largest number of deals during the year, with a total of 156 transactions.
"Asia-Pacific buyers and sellers were behind the largest number of deals in 2011. Any softening of European valuations, for example, will further heighten the interest of Asia-Pacific buyers, already helped by exchange rates," the report noted.
In contrast, Europe recorded its lowest share of worldwide power M&A deals in terms of value since PwC started analysing deal-making in the sector in 1999, with the total deal value in Europe plummeting 43% year-on-year to $39.8 billion in 2011 from $70.3 billion in the previous year.
"It's a different M&A world that is less euro-centric. European companies are looking to South America and other growth markets. Asia-Pacific buyers are busy in Europe. The US deal flow is compelling and has further to go if current deals get the regulatory green light," PwC Global Power and utilities leader Manfred Wiegand said.
"There are plenty of reasons to expect deal flow to continue unless the current crisis has a worldwide recessionary effect," he added.
Looking ahead, the report noted, "A mix of divestment, repositioning and market growth imperatives continue to make for potentially buoyant power deal conditions. But a pick-up remains stalled as concerns about the euro zone crisis and economic growth persist."
