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

Mirosław Wasilewski, Serhiy Zabolotnyy and Dmytro Osiichuk
Additional contact information
Mirosław Wasilewski: Department of Finance, Warsaw University of Life Sciences-SGGW, 02-787 Warsaw, Poland
Serhiy Zabolotnyy: Department of Finance, Warsaw University of Life Sciences-SGGW, 02-787 Warsaw, Poland
Dmytro Osiichuk: Department of Finance, Kozminski University, 03-301 Warsaw, Poland

Energies, 2021, vol. 14, issue 21, 1-20

Abstract: The present study documents a positive market reaction to mergers and acquisition (M&A) deals involving renewable energy companies. Acquirers record positive post-deal cumulative risk-adjusted returns upon taking over a renewable energy target, especially if the former also operates in the renewable energy sector. Such deals often involve purchases of majority equity stakes financed with acquirers’ stock rather than cash. Acquirers of renewable energy firms tend to be more profitable and cash-rich than their industry peers, yet they are less likely to be serial acquirers and channel cash reserves towards M&As. We evidence that the quality of corporate governance in the energy sector may play a substantial role in shaping the choice of targets; a director’s outside affiliations increase the likelihood of takeovers of non-energy firms, while the presence of outsiders on board appears to incentivize diversification into renewable energy. While acquisitions of renewable energy firms feature lower-than-average acquisition premia and generate positive short-term stock returns, they are found to exercise an overall negative short- and medium-term impact on the combined entities’ operating performance. Overall, capital markets appear to attach a sizeable premium to risky deals involving renewable energy firms, possibly in expectation of wealth accrual in the long term.

Keywords: renewable energy; mergers and acquisitions; shareholder value; market consolidation; abnormal stock returns; energy transition; operating performance (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: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.mdpi.com/1996-1073/14/21/7126/pdf (application/pdf)
https://www.mdpi.com/1996-1073/14/21/7126/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:14:y:2021:i:21:p:7126-:d:669710

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().