Cramer Expects More Utilities to Merge

Cramer on today’s WALL STREET CONFIDENTIAL video on TheStreet.com has said that this TXU (TXU) buyout is going to run-up the other power companies.  It was $5.00 4-years ago and it would have been smarter to buy this then, according to Cramer (gee, really?).  While it is larger than the RJR Nabisco deal in the past, these deals just aren’t really that big now.  Cramer thinks this won’t actually make a lot of money on the deal.  TXU will never equal the growth that other companies can show, but it will grow.  The utilities can see the same flood of merger speculation like we saw in REITS over the last 4-months or more.  Cramer said the Texas market is more pro-company than say California or New Jersey and this could be the consolidator and there has been enough time between now and Enron that will let it get done.  Cramer did not give a list of secondary and teriary names today, but we have one of our own.

As a reminder we gave ouw own full list of these larger power utilities on our post regarding the merger calling for the same.  Here is that full article, but a summary of the list is here:

Duke Energy (DUK) $30 Billion market cap; 12.7 P/E;
FPL Group (FPL) $24.9 Billion market cap; 18.4 P/E;
Entergy (ETR) $20 Billion market cap; 18.8 P/E;
Firstenergy (FE) $20 Billion market cap; 16.5 P/E;
American Electric Power (AEP) $18 Billion market cap; 26 P/E;
Edison Int’l (EIX) $15 Billion market cap; 13.3 P/E;
AES Corp (AES) $14.9 Billion market cap; 40 P/E;
PPL Corp. (PPL) $14.1 Billion market cap; 16.7 P/E;
Constellation (CEG) $13.7 Billion market cap; 14.7 P/E;
Progress Energy (PGN) $12.9 Billion market cap; 22 P/E;
Xcel Energy (XEL) $9.9 Billion market cap; 18 P/E;
DTE Energy (DTE) $8.5 Billion market cap; 12.7 P/E;
NRG Energy (NRG) $7.9 Billion market cap; 12 P/E.

Jon C. Ogg
February 26, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.