How to Beat the Competition to a $20 Billion Deal
National Grid is paying a high price and swapping assets to secure a major U.S. power deal. But the sacrifices made to get the deal are worth it.
A transformation.
Photographer: Chris Ratcliffe/Bloomberg
Infrastructure funds must be seething. They missed out on deals for some $25 billion of power assets announced on Thursday as U.S. utility PPL Corp. sold a huge chunk of its business to U.K. peer National Grid Plc, taking cash and assets in return. National Grid played a trump card to see off competition in the auction from them and other rivals. Even so, it’s also had to make sacrifices.
The deal makes broad strategic sense. PPL is jettisoning the Western Power Distribution unit that distributes power in England’s south west and Midlands, and in south Wales. The move will reduce its exposure to the U.K. regulatory regime, something that’s been a headache for U.S. investors, and strengthen the balance sheet. Meanwhile, National Grid boosts its exposure to the broad trend of electrification with the WPD purchase. For example, the rollout of electric vehicle charging points will feed off that network.