Summary
- PPL has announced that it wishes to sell its UK operations.
- UK holdings make up a sizeable portion of the company’s present operations.
- There are three possible outcomes for investors to consider.
PPL Corporation’s (PPL) announcement that it is seeking a buyer for its UK electricity distribution network (Western Power Distribution) has caused speculation, both as to possible companies interested in the business as well in the stock price of PPL itself.
Source: Westernpower.co.uk
The announcement itself certainly caught speculators’ attention. On Friday, August 7, PPL stock closed at $27.14 per share. By Monday, it jumped as high as $29.26 before closing on Friday, August 14, at $29.05. Altogether, a 7% rise in one week. Not bad for a utility stock.
The volume of shares traded also increased with 4.9 million shares traded on August 7 and 8.9 million traded on August 10, the day of the public announcement.
The announcement overshadowed the company’s actual earnings announcement where the quarterly GAAP earnings and revenue fell below expectations although its non-GAAP earnings were in-line.
Now that PPL has publicly announced its intentions, investors can only speculate on the outcome of PPL’s efforts.
Seaport Global, an investment bank with headquarters in both New York and London, believes that Berkshire Hathaway might be interested in the UK operations. Last year there were reports that PPL was seeking a merger with Avangrid, which is controlled by Iberdrola, S.A., a Spanish multinational electric utility company.
Of course, PPL will entertain all offers as stated in their recent earnings presentation.
