The Dominant Motives of Mergers and Acquisitions in the Energy Sector in Western Europe from the Perspective of Green Economy

Abstract

The aim of the research, the results of which are used in this publication, was to identify the motives for mergers and acquisitions in the energy sector after the introduction of green economy elements in Western Europe. The mentioned region is the group of countries where changes related to the move to green energy are most visible (in addition to some countries from other regions, such as Singapore, New Zealand, or countries of the Arabian Peninsula). The research assumed the hypothesis that over the years since the Paris Conference the themes of mergers and acquisitions have changed from motives close to the views related to energy generation in traditional systems (black energy in large, monopolistic systems) to motives close to green energy (the research hypothesis). This was confirmed in the research, as business risk diversification (defined as diversification of the power sources from black to green) was the most popular M&A motive. In addition to emphasizing the direction of changes in the M&A motives, the authors of this study decided to check whether since 2015 (when the Paris Conference was organized) the motives behind the M&A transactions conducted by companies operating in the electrical energy generation sector have changed, making their motives close to the green energy dominant in Western Europe. Apart from verification of the abovementioned hypothesis, the aim of the research was to check whether there are any characteristic directions of changes in M&A motives across companies from particular Western European countries. The motives are changing from positional approaches to motives closer to resource approaches (green economy). The research used a critical analysis of the literature on the subject, a study that used desk research based on openly available sources and our own analytical tool developed for the needs of this analysis, which is the transformation of the concept of analysis of the M&A motives proposed in K. Borowski’s research: “The strategic development of the technology companies. The mergers and acquisitions perspective”.

Cross-border mergers and acquisitions in manufacturing sector in the European area

“…Thus, the Gas, Water, Electricity sector achieved the first place among manufacturing sectors in our survey. In previous studies, the potential of this sector within M&As was pointed out in particular by Niemczyk et al (2022), but also other authors, such as Andriuškevičius, Štreimikienė (2021), Codognet et al (2002), Monastyrenko (2017). Codognet et al (2002) also outlined that the leading countries in this area are Germany and the UK, which we also confirmed with our analyses.…”

Sustainability Framework for Assessment of Mergers and Acquisitions in Energy Sector

“…In line with this, ref. [50] conclude that M&A in the energy industry reflect changes in the environment. Due to government decisions circumstanced by international agreements, which companies have little control over, energy companies pursue M&A to increase internal efficiency and enhance competitiveness.…”

“…This reflects various regulatory developments, advancing environmental and reporting requirements, digitalization, and the emergence of new risks in the corporate environment. Several studies [49,50] support that M&A in the energy industry reflect changes in the environment, and that companies often pursue M&A strategy in order to cope with increasing pressure towards green transformation and sustainable development [51][52][53]. Therefore, these factors have influenced incorporation of sustainability consideration into M&A processes.…”

“…Due to government decisions circumstanced by international agreements, which companies have little control over, energy companies pursue M&A to increase internal efficiency and enhance competitiveness. According to the authors [50], growing M&A deals in the energy industry confirm that changes are occurring as a reflection of departure from traditional coal-based energy industry toward changes initiated at the 2015 conference in Paris which sought to ensure a sustainable future and sustainable development by increasing the interest in markets with access to "green and clean" energy while on the other hand increasing the costs of energy companies.…”

Energy Security as a Premise for Mergers and Acquisitions on the Example of the Multi-Energy Concern PKN Orlen in the Face of the Challenges of the 2020s

“…Through capital concentration in the energy sector, so closely related to security and management of critical infrastructure, the state and energy companies pursue a strategy of ensuring energy security [48]. The practical and at the same time measurable effect of this process are mergers and acquisitions, which allow for the increase in the share of the State Treasury in energy companies, and thus also for the control of this part of the economy, regardless of the influence of private entities.…”