What am I Missing?


norfolk

I was perusing through the business sections of the online newspapers and I stumbled upon this: http://www.thestar.com/business/2013/04/03/hydro_one_buys_norfolk_hydro_for_93_million.html .
I have mentioned many times in this space that I am not an educated person. In fact in terms of such high flying business deals like selling a local public utility I am somewhat of a ‘Nobody’.

Norfolk Hydro had a slightly larger customer base than Collus. Somewhere in the region of 19,000 customers.

We sold 50% of Collus for $15 million.

What am I missing???

Seriously I am just asking???

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8 thoughts on “What am I Missing?

  1. Anonymous I read the article in the Star saw the $93 million and I am now asking the question. Considering some of the other issues that have come to light recently, I would not want an outhouse sold under this current administrations watch, let alone one of this towns largest assets. I get what you are saying about the customer base but it looks to me like the largest industry in that general area is a Horseradish manufacturing factory. We have Pilkington, Canadian Mist, the glass factory that used to be Alcoa. The ethanol plant will eventually come back on line. Also if the controlling interest is such a big deal then why didn’t they just sell the whole thing?

    • But the more I think of this the more I realise there are unknown factors. What about assets? Does each company own it’s property, inrastructure and equipment or lease? Does each company run its own service and repair business or contract this out? I have no clue.

      I’m not really comfortable speculating on any of this without the facts. I guess with a lot of research and analysis I could form an opinion on this. But I guess thats the difference between real journalism and idiots like us (yes, I include myself) just mouthing off about stuff online. The danger is that people out there are forming opinions based on these comments.

      • I would be interested to see how much other utilities are selling for. Lots of small utility companies are being sold off to the big players Power Stream and Hydro 1.

      • So we just shut up and go back to sleep, because others know best.? Is that you Sc…… sorry nameless journalist??? Your writing style seems familiar to me. Or am I just seeing nameless journalists everywhere these days?

      • I’m not a journalist, but I’ll take the writing style comments as a compliment.
        Let me try and explain why I get frustrated. In the circles I move in, nobody is following this story and nobody seems to care. Whatever rumours are going around, I’m just not hearing any of it. Thats not your fault. But I bet I represent the vast majority of the public.
        So, I look at a few blogs trying to find out what is going on. And I just cant! But the way you guys are talking its all a done deal. Guilty!
        I want to know whats going on (no, I dont think we should be asleep). But what I find is a post that implies the town let an asset go for too low a price (for some corrupt reason?). But how the f**k should I know if it was undervalued? And why the f**k should I trust you to know?

  2. Also, the Collus deal was only for the ‘electricity’ part of the business. Looks like Hydro One bought the entire Norfolk business? This includes some Telecom stuff according to website. Not sure how significant that is.

  3. OK, I’m not an expert but a quick look at Norfolk Power’s website helps a bit. The actual purchase price was less; $66M. $93M is a theoretical value based on the company not having any debt. In the sale of companies, buying a controlling stake commands a premium (Powerstream didn’t get a controlling stake of Collus did they?). Buying the whole company commands a further premium. In terms of comparing the size, the number of customers is fairly meaningless. Retired couple in small house = 1 customer. Farm = 1 customer. Car plant = 1 customer. You would need to compare total energy distributed and peak power. Alternatively, I suppose total annual revenue would be a fair and interesting comparison. Along with profitability.

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