Utilicorp Buys Stake in Electric Line Company
Adding to its long list of utility, marketing and transportation
assets, Aquila Energy parent Utilicorp United entered into a
strategic partnership with Quanta Services Wednesday for $400
million. Utilicorp hopes to increase its profit potential in the
deregulating electric and telecommunications markets by teaming
with the Houston-based Quanta, a provider of specialized services
for companies in those industries.
Calling the deal a "complementary extension" of UtiliCorp's
network strategy, Robert Green, UtiliCorp COO said that
deregulation of energy and telecom utilities offers a very
attractive growth opportunity. "Our partnership with Quanta, the
premier energy and telecom contractor, will enable our two
companies to combine skills and international experience to capture
both energy and telecom network business in this market as it
develops." He added that the market for U.S. network construction
and maintenance is more than $40 billion with strong growth and a
consolidation under way.
Jerry Cosely, a Utilicorp spokesman, said the company is
breaking new ground with this venture. "In terms of a network
aspect, this is all new to us. This is our first foray into the
hardware construction and maintenance in the electric and telecom
But Cosley also pointed out that this is not Utilicorp's first
experience with telecommunications. In 1998, the Kansas City-based
company entered into an alliance with Peco Energy to form EnergyOne
LLC. This marketing arm offered AT&T long distance as part of a
package that also included gas and power options. Unfortunately for
Utilicorp, the partnership failed because the energy markets hadn't
deregulated enough (See Daily GPI, April 29,
At closing of the transaction, Quanta will initially receive
proceeds of $150 million in exchange for Convertible 6.5% preferred
stock. The remaining investment of up to $250 million by UtiliCorp
could take the form of a direct equity investment in Quanta and/or
the purchase of Quanta's existing outstanding securities. No other
terms were disclosed.
"We are pleased to announce our second significant
investment-related strategic partnership as the deregulation of the
power industry continues to increase in its intensity," stated John
Colson, Quanta Services' CEO.
Quanta also has a similar agreement with Enron Capital &
Trade Resources Corp. (ECT). This partnership, agreed to in October
of 1998, required a $50 million investment from Enron.
Quanta Services, Inc. is a provider of specialized contracting
services to electric utilities, telecommunication and cable
television operators, and governmental entities.
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