Purchasing reserves and commodity market timing as takeover motives in the oil and gas industry

Alex Ng and Han Donker

Energy Economics, 2013, vol. 37, issue C, 167-181

Abstract: Can broad factors such as natural resources endowment and global commodity markets influence corporate takeovers? This paper theorizes that managers are motivated in mergers and acquisitions to purchase energy reserves and to time the commodity market in the oil and gas industry. We find supportive evidence that shows that energy reserves and prices cause and affect takeover activity, value, and performance. Acquirers are motivated to purchase reserves, while targets are motivated to sell based on market timing. Acquirers have negative takeover performance from lower risk. Our conclusions are robust to the traditional explanations: equity valuation, synergy, free cash flow, equity and debt market conditions, and economic cycles.

Keywords: Takeovers; Mergers & acquisitions; Oil and gas industry; Oil reserves; Energy (search for similar items in EconPapers)
JEL-codes: G34 L71 M20 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:37:y:2013:i:c:p:167-181

DOI: 10.1016/j.eneco.2013.01.010

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