Determinants of Mergers and Acquisitions in the Energy Industry - Evidence from the European Market

The energy industry in Europe has been exposed to major changes since the early 1990s. What effects this changing market scene has had on the companies active in the energy industry is an interesting research area. We aimed in this thesis to investigate what were the determinants behind firms engaging in M&A transactions, between the years 1995 and 2005, based on theories and hypotheses that attempt to explain these strategic decisions. Our results find that some established theories help explain some of the merger motives. Both acquirers and targets tend to be firms with established positions in the market and larger enterprise values. In addition, firms with low expected growth opportunities have a stronger tendency to be active in the takeover market. Finally, we find that relatively high amounts of cash are positively related to being an acquirer