Characteristics and Shareholder Wealth Effects of Mergers and Acquisitions Involving European Renewable Energy Companies

Wasilewski, Mirosław; Zabolotnyy, Serhiy; Osiichuk, Dmytro

doi:10.3390/en14217126

Cited by 4 publications

(4 citation statements)

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“…Despite attempts to regulate the market and a competitive economy within it, policy has not been radically changed in recent years. Therefore, more and more energy companies, within their resources and legal possibilities, have changed their strategies toward the use of renewable energy sources [1]. This way they diversify their energy production.…”

Section: Introductionmentioning

confidence: 99%

The Dominant Motives of Mergers and Acquisitions in the Energy Sector in Western Europe from the Perspective of Green Economy

Niemczyk

Sus²,

Borowski³

et al. 2022

Energies

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The aim of the research, the results of which are used in this publication, was to identify the motives for mergers and acquisitions in the energy sector after the introduction of green economy elements in Western Europe. The mentioned region is the group of countries where changes related to the move to green energy are most visible (in addition to some countries from other regions, such as Singapore, New Zealand, or countries of the Arabian Peninsula). The research assumed the hypothesis that over the years since the Paris Conference the themes of mergers and acquisitions have changed from motives close to the views related to energy generation in traditional systems (black energy in large, monopolistic systems) to motives close to green energy (the research hypothesis). This was confirmed in the research, as business risk diversification (defined as diversification of the power sources from black to green) was the most popular M&A motive. In addition to emphasizing the direction of changes in the M&A motives, the authors of this study decided to check whether since 2015 (when the Paris Conference was organized) the motives behind the M&A transactions conducted by companies operating in the electrical energy generation sector have changed, making their motives close to the green energy dominant in Western Europe. Apart from verification of the abovementioned hypothesis, the aim of the research was to check whether there are any characteristic directions of changes in M&A motives across companies from particular Western European countries. The motives are changing from positional approaches to motives closer to resource approaches (green economy). The research used a critical analysis of the literature on the subject, a study that used desk research based on openly available sources and our own analytical tool developed for the needs of this analysis, which is the transformation of the concept of analysis of the M&A motives proposed in K. Borowski’s research: “The strategic development of the technology companies. The mergers and acquisitions perspective”.

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Section: Introductionmentioning

confidence: 99%

The Dominant Motives of Mergers and Acquisitions in the Energy Sector in Western Europe from the Perspective of Green Economy

Niemczyk

Sus²,

Borowski³

et al. 2022

Energies

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“…However, recently regulatory actions and pressure have been important in prompting various organizations, associations, and national and international authorities to accelerate the energy sector's transition to environmentally sustainable operations. According to Wasilewski et al [42], consolidation in the energy sector is primarily driven by three driving forces: commodity cycles, technological changes, and regulatory actions. According to Eikeland and Skjaerseth [60], currently M&A as a means of corporate restructuring are driven by (i) pursuit of accelerated evolution of energy companies, (ii) active deployment of natural gas and oil industry-wide chain projects, (iii) intensified exploitation of renewable energy, unconventional oil and gas resources, (iv) increasing know-how and developing energy technologies, (vi) global greenhouse gas reduction initiatives, and (vii) pursuit of sustainable development path.…”

Section: Discussionmentioning

confidence: 99%

“…Wasilewski et al [42] Capital intensity and mobilization of ever-increasing investments are among prerequisites to deliver energy projects and ensure satisfactory internal investment return Hu et al [43] Access to resources, increase of market share, profitability potential, and improvement in long-term development Elbassoussy [44] Dependence of external energy resources; EU is net energy importer; energy system depends on limited number of suppliers Arndt et al [45] Significant investments allocated by the EU for developing renewable energies Arndt et al [45] Renewable energy profitability is subject to the fluctuations in energy prices Corporate culture/cultural compatibility allows companies to operate according to common or similar visions regarding certain aspects that other companies probably find less important.…”

Section: Markovska Et Al [35]mentioning

confidence: 99%

“…Energy M&A, especially in the renewables area, are increasing and drawing more attention from public and private investors. However, Wasilewski et al [42] acknowledge that advancements in energy generation technologies are capital intensive and require mobilization of ever-increasing investments. Elbassoussy [44] developed an integrated EU energy security theoretical framework concept with a focus on policies, strategies, and challenges faced.…”

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confidence: 99%

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Energy M&A Market in the Baltic States Analyzed through the Lens of Sustainable Development

Andriuškevičius

Štreimikienė

2022

Energies

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Mergers and acquisitions (M&A) may serve as a catalyst in energy transition by accelerating this trend and “greenwashing” the deals. M&A are often used by large energy companies as a tool to explore potential synergy benefits. Recently, M&A strategies in the energy industry have been pursued to transform traditional business models into more “sustainable” models. On the one hand, it may be observed that companies are taking a proactive rather than reactive approach towards environmental-, social-, and governance (ESG)-related M&A deals. On the other hand, sustainable M&A deals do not interest activist shareholders and regulatory authorities only anymore. Inclusion of a sustainability framework and managing ESG-related risks have become part of the overall strategy of most companies within the energy industry. This research addresses the problem of how energy M&A are contributing to sustainable development on the one hand and reflecting sustainable developments on the other hand. The current research focuses on the systematic literature on the M&A deals in the energy industry through the lens of sustainability by applying the SALSA methodology. Further, we applied a SWOT analysis of M&A in the energy industry from the perspective of sustainable development. Thomson Reuters DataStream 5.1 database was used for developing a case study. A sample of Lithuanian, Latvian, and Estonian energy companies that were involved as acquirers or targets in the M&A events from 1995 to 2020 was developed. Establishing a methodological approach construed of SALSA, SWOT, and case study analyses allowed us to bridge a gap in the existing literature and provoke further discussion in regards to market developments through the lens of sustainable development. The research results showed that there are relatively few M&A of renewable companies as the M&A market is dominated by traditional energy companies within Baltic states. However, companies in the Baltic states are pursuing energy security, have set targets for emission reductions, renewables and energy efficiency, are supporting EU climate neutrality, and put great emphasis on climate change mitigation.

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The Impact of M&As on the Competitive Positioning of European Energy Firms and Market Power Concentration on EU National Energy Markets

et al. 2022

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By studying M&A deals completed by European energy and power companies between 2002 and 2021, the paper inquires into the impact of corporate consolidation on the competitive positioning of individual energy firms and the concentration of market power on the national energy markets in the EU countries. Our evidence suggests that the European energy market may be moving towards a greater concentration of market power as market leaders are shown to primarily acquire their peers from national markets, while outsiders are more likely to diversify into non-energy sectors, which may further endanger their competitive positioning in the future. We also find that M&As allow energy and power companies to substantially increase their market share within national markets. The said impact is stronger in case of cross-border deals, including those within and outside of the EU. At the same time, only cross-border deals are associated with sufficiently strong revenue growth to advance firms’ relative positioning within national markets. The relative positioning of firms in the EU market remains unaffected by M&A activities, which may be indicative of extreme rigidity and segmentation of the EU market. While at the country level, M&As are found to contribute to a reduction in market concentration measured by a number of indicators, this negative link is documented to be entirely driven by non-core acquisitions involving targets from non-energy industries.

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Characteristics and Shareholder Wealth Effects of Mergers and Acquisitions Involving European Renewable Energy Companies

Cited by 4 publications

References 43 publications

The Dominant Motives of Mergers and Acquisitions in the Energy Sector in Western Europe from the Perspective of Green Economy

The Dominant Motives of Mergers and Acquisitions in the Energy Sector in Western Europe from the Perspective of Green Economy

Energy M&A Market in the Baltic States Analyzed through the Lens of Sustainable Development

The Impact of M&As on the Competitive Positioning of European Energy Firms and Market Power Concentration on EU National Energy Markets

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