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

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 renew...

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Autores principales:	Mirosław Wasilewski, Serhiy Zabolotnyy, Dmytro Osiichuk
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	renewable energy mergers and acquisitions shareholder value market consolidation abnormal stock returns energy transition Technology T
Acceso en línea:	https://doaj.org/article/e94ebcd02d0d4f1eb72bab84db2b41b9
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spelling	oai:doaj.org-article:e94ebcd02d0d4f1eb72bab84db2b41b92021-11-11T15:55:00ZCharacteristics and Shareholder Wealth Effects of Mergers and Acquisitions Involving European Renewable Energy Companies10.3390/en142171261996-1073https://doaj.org/article/e94ebcd02d0d4f1eb72bab84db2b41b92021-11-01T00:00:00Zhttps://www.mdpi.com/1996-1073/14/21/7126https://doaj.org/toc/1996-1073The 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.Mirosław WasilewskiSerhiy ZabolotnyyDmytro OsiichukMDPI AGarticlerenewable energymergers and acquisitionsshareholder valuemarket consolidationabnormal stock returnsenergy transitionTechnologyTENEnergies, Vol 14, Iss 7126, p 7126 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	renewable energy mergers and acquisitions shareholder value market consolidation abnormal stock returns energy transition Technology T
spellingShingle	renewable energy mergers and acquisitions shareholder value market consolidation abnormal stock returns energy transition Technology T Mirosław Wasilewski Serhiy Zabolotnyy Dmytro Osiichuk Characteristics and Shareholder Wealth Effects of Mergers and Acquisitions Involving European Renewable Energy Companies
description	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.
format	article
author	Mirosław Wasilewski Serhiy Zabolotnyy Dmytro Osiichuk
author_facet	Mirosław Wasilewski Serhiy Zabolotnyy Dmytro Osiichuk
author_sort	Mirosław Wasilewski
title	Characteristics and Shareholder Wealth Effects of Mergers and Acquisitions Involving European Renewable Energy Companies
title_short	Characteristics and Shareholder Wealth Effects of Mergers and Acquisitions Involving European Renewable Energy Companies
title_full	Characteristics and Shareholder Wealth Effects of Mergers and Acquisitions Involving European Renewable Energy Companies
title_fullStr	Characteristics and Shareholder Wealth Effects of Mergers and Acquisitions Involving European Renewable Energy Companies
title_full_unstemmed	Characteristics and Shareholder Wealth Effects of Mergers and Acquisitions Involving European Renewable Energy Companies
title_sort	characteristics and shareholder wealth effects of mergers and acquisitions involving european renewable energy companies
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/e94ebcd02d0d4f1eb72bab84db2b41b9
work_keys_str_mv	AT mirosławwasilewski characteristicsandshareholderwealtheffectsofmergersandacquisitionsinvolvingeuropeanrenewableenergycompanies AT serhiyzabolotnyy characteristicsandshareholderwealtheffectsofmergersandacquisitionsinvolvingeuropeanrenewableenergycompanies AT dmytroosiichuk characteristicsandshareholderwealtheffectsofmergersandacquisitionsinvolvingeuropeanrenewableenergycompanies
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Characteristics and Shareholder Wealth Effects of Mergers and Acquisitions Involving European Renewable Energy Companies

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