AI Data Center "Power Shortage" Boosts Demand for Traditional Power Assets; Private Equity Giant KKR (KKR.US) Plans to Acquire UGI (UGI.US), a US Energy Distributor, for $9 Billion

According to Jinse Finance, private equity giant KKR (KKR.US) has recently submitted a non-binding acquisition proposal to natural gas and electricity distributor UGI Utilities (UGI.US), with the deal valued at approximately $9 billion.

Sources indicate that KKR’s offer price is $42.50 per share. The report also notes that it is currently uncertain whether UGI will accept these terms or if a definitive agreement can eventually be reached with KKR or other potential bidders.

It is understood that UGI is headquartered in King of Prussia, Pennsylvania. Its business covers natural gas and electricity distribution, long-distance natural gas pipeline and storage system operations, and it owns propane retailer AmeriGas. In addition, the company also supplies liquefied petroleum gas products in Europe.

Boosted by this news, UGI’s stock price surged by 9% on Tuesday. Over the past year, UGI’s share price has risen less than 2%, compared with a 20% gain in the S&P 500 Index over the same period.

Data Center Demand Surges, Accelerating M&A Integration in the Power Sector

The core driver behind the acceleration of mergers and acquisitions in the natural gas and power generation sector is the massive demand for electricity from artificial intelligence (AI) workloads and hyperscale data centers. High power density AI clusters require stable, controllable baseload power supply, shifting investor focus back to traditional power plants and natural gas infrastructure.

According to a recent energy analysis report released by the International Energy Agency (IEA), driven by AI computing needs, global data center electricity consumption is expected to double by 2030, reaching about 945 to 1,000 terawatt-hours (TWh).

After years of being neglected by the market, natural gas power generation companies providing stable and reliable electricity for AI data centers are once again attracting capital attention. A typical case is the natural gas power producer Calpine—private equity firm Energy Capital Partners sold it earlier this year to Constellation Energy (CEG.US). Reports indicate this transaction may become one of the most profitable private equity deals in history.