Duff & Phelps Reaffirms Rating Watch for PacifiCorp and PacifiCorp Group Holdings Company Amidst ScottishPower Merger

Strategic Insights -

Duff & Phelps Credit Rating Co. (DCR) has reaffirmed Rating Watch--Uncertain for the securities of PacifiCorp and PacifiCorp Group Holdings Company following the announcement of a merger with ScottishPower. The deal, valued at $12.8 billion, will see each PacifiCorp share exchanged for 0.58 American Depository Receipts or 2.32 ordinary shares of ScottishPower. The acquisition is part of ScottishPower's strategy of international expansion and aims to leverage its expertise in operating electric and multi-utility companies. DCR views the merger as positive for PacifiCorp's credit profile, particularly in diminishing business risks associated with nonutility businesses.

Key Takeaways:

  • Duff & Phelps Credit Rating Co. (DCR) has reaffirmed Rating Watch--Uncertain for PacifiCorp and PacifiCorp Group Holdings Company following the ScottishPower merger announcement.
  • The merger, valued at $12.8 billion, involves exchanging each PacifiCorp share for 0.58 American Depository Receipts or 2.32 ordinary shares of ScottishPower.
  • ScottishPower's acquisition strategy aims to increase operating efficiency and achieve cost savings, potentially benefiting PacifiCorp's credit profile.
  • The merger has the potential to accelerate previously announced cost savings by PacifiCorp, totaling $750 million.
  • DCR has noted that ScottishPower's plans to continue with PacifiCorp's strategic redirection are positive for PacifiCorp's credit profile and diminish business risks associated with nonutility businesses.
  • DCR will reassess ratings following a full analysis of the quantitative and qualitative profile of PacifiCorp and PacifiCorp Group Holdings Company.
  • PacifiCorp conducts retail electric service through two divisions, Pacific Power & Light and Utah Power & Light, serving portions of California, Idaho, Montana, Oregon, Utah, Washington, and Wyoming.
  • ScottishPower is a multi-utility in the UK serving 5 million electric, gas, water, and telecom users across three geographic territories: England, Wales, and Scotland.

Statistics:

  • $12.8 billion: The total value of the ScottishPower-PacifiCorp merger.
  • $7.9 billion: The equity value of PacifiCorp as part of the merger.
  • $4.9 billion: The net debt of PacifiCorp assumed by ScottishPower under the merger.
  • 0.58 American Depository Receipts or 2.32 ordinary shares: The exchange rate for each PacifiCorp share under the merger.
  • $750 million: The total cost savings announced by PacifiCorp, expected to be accelerated by ScottishPower.
  • 5 million: The number of electric, gas, water, and telecom users served by ScottishPower in the UK.
  • 3: The number of geographic territories served by ScottishPower in the UK: England, Wales, and Scotland.

Sources:

  • "Duff & Phelps Reaffirms Rating Watch for PacifiCorp and PacifiCorp Group Holdings Company Amidst ScottishPower Merger" (PRNewswire, Dec. 8)
  • "PacifiCorp to Sell Nonregulated Businesses, Refocus on Core Electric Business" (PacifiCorp Press Release, Oct. 1998)
  • "ScottishPower's Acquisition of PacifiCorp: A Strategic Fit for Both Companies" (Duff & Phelps Credit Rating Co.)