Evaluation of Synergies in the Context of European Multi-Business Utilities

Jens Fuhrmann and Reinhard Madlener
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Jens Fuhrmann: RWTH Aachen University, Templergraben 55, 52056 Aachen, Germany

Energies, 2020, vol. 13, issue 24, 1-41

Abstract: In this paper, we evaluate selected multi-business utilities in the European energy market with regard to synergy potentials. To this end, we survey the development of the energy market in Europe and the performance of integrated versus focused utilities regarding their capital market performance measured by their corporate surplus (or deficit). The analysis is restricted to true business integration, in contrast to horizontal or vertical cooperation among separate firms. The German utility company RWE is analyzed in more detail. We find that, over the last 10–15 years, most of the multi-business utilities investigated underperformed compared to more focused utilities, and that they were even below the STOXX Europe 600 utilities index. Furthermore, synergy potentials need to be evaluated continuously, especially when influencing factors, with the potential to act as “game changers”, are either emerging on the horizon or are already present. We conclude that operating an integrated business model is not necessarily outdated in today’s energy markets, and offers a number of advantages.

Keywords: multi-business firm; multiple business models; market regulation; electric utility industry; operational synergies; corporate value; RWE; E.ON (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:13:y:2020:i:24:p:6676-:d:463815

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