Developments and Trends of Mergers and Acquisitions in the Energy Industry

Karolis Andriuškevičius,Dalia Štreimikienė

doi:10.3390/en14082158

Abstract

Developments, trends, business climate, conditions, factors influencing the efficiency and results of mergers and acquisitions (M&A) in the energy sector are explored in this research. PESTLE (political, economic, social, technological, legal, environmental) analysis was performed in order to determine the driving forces of M&As in the energy industry. Considering the motivation and main questions of the study, a sample of global M&A deals that have occurred during the period 1995–2020 has been analyzed. DataStream 5.1 database by Thomson Reuters was employed to identify the sample of global energy companies that took over another company in the period 1995–2020. According to the research, while the role and presence of M&As in the energy industry are increasing, the purpose of the M&A deals has changed remarkably. During 1995–2010, most M&A events were conducted in order to explore synergies and benefit from cost reduction. Since the last decade, firms are pursuing M&As in the search of growth opportunities, ensuring supply and reflecting demand for green development of ecological environment and ongoing changes in the nature of energy.

Highlights

Already 30 years ago, an empirical observation was made [1] that “over the past 20 years, the minimum company size required to compete successfully in most industry segments has been steadily increasing.” Within the content of this assertation is an assumption of growth being a key element for business success and prosperity
In the Energies 2021, 14, x FOR PEER REVIEcWontext of this paper, the PESTLE analysis focuses on various changes in the industr6y othf a1t4 researchers, practitioners, scholars, and policymakers should address in order to approach mergers and acquisitions (M&A) in the energy industry and adopt solutions that would benefit related stakeholders
Following the framework of PESTLE analysis, we have presented political, economic, social, technological, environmental, and legal factors that shape M&As in the energy industry

Summary

Introduction

Already 30 years ago, an empirical observation was made [1] that “over the past 20 years, the minimum company size required to compete successfully in most industry segments has been steadily increasing.” Within the content of this assertation is an assumption of growth being a key element for business success and prosperity. Two main paths lead to business growth—either companies grow internally by nurturing within-firm resources and internal investments or firms pursue an external growth strategy and proceed with acquiring other firms. A merger occurs when two individual firms combine and turn into a single new company. Following this transaction, shares of each company are surrendered, and shares of a new company are issued instead. An acquisition occurs when a firm buys shares of another and becomes a legal shareholder of the acquired company. The bidder takes over the business of the acquired company. Shares of the acquired company stop, while shares of the bidder continue to be traded

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Discussion

Conclusion