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AI to Fuel Record Year for M&A in U.S. Power Sector

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Dealmakers anticipate that 2025 will be a record year for mergers and acquisitions (M&A) in the U.S. power sector, driven by the surging demand for electricity to support artificial intelligence (AI). This growing appetite for power generation and infrastructure assets is fueled by the massive energy needs of data centers that power AI technologies.

According to sources in the industry and at the CERAWeek energy conference in Houston, the first two months of 2025 have already seen significant deal-making activity, with 27 power deals valued at $36.4 billion. A standout transaction was Constellation Energy’s acquisition of Calpine for $16.4 billion. This surge in deal volume contrasts sharply with the broader M&A market, which has experienced its weakest start since the global financial crisis.

Power sector deal flow is expected to increase as companies race to meet growing electricity consumption. Private equity firms and institutional investors, such as KKR and PSP Investments, are actively pursuing investments, with KKR and PSP’s $2.8 billion acquisition of a 20% stake in American Electric Power’s (AEP) transmission network as one of the major recent deals. Strong electricity price increases have boosted the shares of power companies, enabling larger transactions.

The influx of capital into energy investments is substantial, with $334 billion in dry powder (capital raised but not yet deployed) by the end of 2024. Much of this capital is earmarked for investments in power generation, infrastructure technologies, and renewable energy projects. These funds are also fueling the increasing trend of taking public power companies private, as seen in the $2.2 billion sale of Altus Power to TPG’s climate investment arm.

The demand for power infrastructure has also driven utilities to divest non-core business units. In early 2025, Eversource Energy agreed to sell its Aquarion Water unit for $2.4 billion, while National Grid announced the sale of its U.S. renewables business to Brookfield Asset Management.

Despite challenges, such as rising costs for essential components like steel, aluminum, and copper, and uncertainties around tax credits for renewable projects, the deal-making momentum in the power sector is expected to continue. Market volatility, including potential impacts from Trump administration policies and immigration reform, will likely make existing power assets even more valuable, spurring more deals.

Bain Capital Raises Offer for Fuji Soft, Outbids KKR

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Bain Capital, a prominent U.S. private equity firm, has increased its offer for Japan’s Fuji Soft to ¥9,600 ($62.88) per share, surpassing KKR’s latest bid by 1.6%, according to an announcement on Wednesday. This escalates the ongoing battle between Bain and rival KKR for control of the $4 billion software company.

The competition began in August when KKR launched a ¥8,800 per share tender offer, later raising it to ¥9,451 to counter Bain’s earlier bid of ¥9,450. Bain’s latest move reflects the intense rivalry, driven by Japan’s rising appeal as a hub for mergers and acquisitions (M&A).

SUPPORT FROM FUJI SOFT MANAGEMENT

Despite Bain’s revised bid, Fuji Soft’s management has maintained its support for KKR, citing strategic concerns. KKR structured its offer into two stages, first acquiring a 34% stake—enough to block a potential Bain-led privatization—before proceeding toward a majority stake.

Last month, Fuji Soft rejected Bain’s bid, arguing that KKR’s partial acquisition rendered Bain’s offer unviable. Management also demanded that Bain destroy the sensitive company information obtained during due diligence and refrain from further proposals.

Bain, however, has criticized these actions, claiming they disregard shareholder interests. The firm reiterated its intent to use the information gathered to proceed with its tender offer as soon as possible, emphasizing its commitment to shareholder value.

JAPAN’S GROWING M&A MARKET

This bidding war highlights Japan’s growing status as a hotspot for private equity deals. Inbound M&A activity in the country reached a record $81 billion in the first ten months of 2023, a 17-fold increase from the same period last year, according to LSEG data.

The outcome of the Fuji Soft deal could set a precedent for future investments in Japan’s evolving corporate landscape, where private equity interest continues to rise.

Sony Rules Out Renewing Offer for Paramount, Citing Strategic Misalignment

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Sony has officially withdrawn from the bidding war for Paramount Global, stating that acquiring the company would not align with its strategic goals. Hiroki Totoki, Sony‘s Chief Financial Officer, confirmed the decision during the company’s first-quarter earnings presentation, stating that a full acquisition of Paramount would pose significant risks due to potential misalignment with Sony‘s capital allocation structure.

This decision comes after reports from the Japanese financial newspaper Nikkei, indicating Sony‘s withdrawal following Skydance Media‘s successful acquisition of Paramount Global. Skydance, along with partners RedBird Capital Partners and KKR, invested over 2.4 billion.

Sony and private equity firm Apollo Global Management had previously expressed interest in acquiring Paramount for approximately $26 billion. However, Sony‘s revised stance reflects a shift in strategy, potentially influenced by the company’s 7% profit decline in fiscal 2023, attributed to weakness in its financial services division.

The deal marks the end of the Redstone family’s long-standing control over Paramount. Sumner Redstone, the media mogul, acquired Paramount in 1994, and his daughter Shari Redstone has led the company since his passing in 2020.