Cross-Border Mergers and Acquisitions in the Oil and Gas Industry: An Overview

Abstract

This paper surveys cross-border oil and gas mergers and acquisitions (M&A) transactions in recent years using a large sample of 18,179 transactions announced over the period 2000–2018. M&A activities depend on economic fundamentals, but also on sector specifics and this particularly holds true for the oil and gas industry. Therefore, we have added sector specific to the standard economic explanations of mergers and acquisitions by accounting for institutions, resources, and politics. Indeed, our outputs show that industry-specific factors seem much more important in motivating M&A in the oil and gas industry than the familiar and researched economic conditions. In particular, the pattern of cross-border M&A is almost unrelated to opportunities offered by the resource base in different countries while political, institutional, and legal constraints shape the directions of cross-border M&A. The research covers the recent trends in the oil and gas M&A transactions, strengthens the understanding of various dynamics and sheds light on the potential future directions of the M&A market in the oil and gas industry.

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

“…First, the short-term shareholder wealth effects of such deals are frequently neutral and even negative [26]. This is possibly due to the fact that the anticipated synergies are significantly more difficult to extract, especially in case of horizontal acquisitions (for example, involving only downstream or retail companies) [27,28]. Another possible explanation for the lack of positive short-term stock price shifts is overpayment for targets.…”

Industrial Policy’s Effect on Cross-Border Mergers’ Decisions—Theoretical and Empirical Analysis

“…As well as the expansion of the core influence of industry, relevant preferential policies will be formulated across regions, and laws and regulations will be promulgated to promote the development of key industries. Enterprises in industry carry out cross-regional M&As, and through cross-regional M&As, they can quickly become stronger and bigger, and improve their core competitiveness [21]. Therefore, the central government will provide incentives to promote central SOEs to carry out cross-regional M&A transactions, so as to give full play to the role of the central government and to the leading role of state-owned enterprises.…”