Impact of mergers and acquisitions on the sustainability of the energy sector and companies operating therein

The EU is the world’s largest importer of energy, importing 53% of its needed energy for about EUR 400 billion, and it is dependent on a small number of countries supplying energy. In order to balance out and liberalize the EU’s internal energy market, measures aimed at resolving the issues relating to access to the market, transparency and regulation, consumer protection, network interconnection and sufficient supply have been adopted since 1996. The liberalization of the EU energy market has had a significant impact on the industrial organization of the sector. Companies operating in the energy sector (E.ON. Powergen, RWE, National Power, Innogy, EDF, Edison, EnBW, EdP, Suez, Endesa, Enel, Vattenfall, etc.) implemented new development strategies and actively concluded merger and acquisition transactions in order to achieve synergy, financial and economic benefits, making us wonder if global concentration is becoming a problem. Is there some kind of “healthy” balance between concentration and competition that should be pursued in the energy sector to ensure the principles of sustainability? Mergers and acquisitions have a major impact on the sustainability of the energy sector, as they address environmental, social, economic and managerial (ASEV) effects not only on the parties directly involved in such transactions, their shareholders, employees and suppliers, but also on the society as a whole. Companies can and should pursue integration of sustainability aspects in merger and acquisition transactions, from the performance of the initial due diligence to the completion of the transaction. With energy sector companies concluding merger and acquisition transactions, the companies involved will have significant opportunities and face risks in the area of ensuring sustainability of the energy sector: opportunities to create more ambitious and resilient sustainability strategies, and the risk that sustainability goals will be met only in part due to a significant pressure of shareholders of the companies to create short-term value.

Project aim: The main aim of the fellowship is to develop a methodology, which would allow assessing the relationship between merger and acquisition transactions and the principles of sustainable development in the EU energy sector, and to improve scientific qualification.

The main tasks include:

  1. to systemize empirical studies and to form and prepare a methodology, which would allow assessing the relationship between merger and acquisition transactions and the principles of sustainable development in the EU energy sector;
  2. to adapt and test the developed methodology, assessing the impact of merger and acquisition transactions on the sustainability of the energy sector and companies operating in it in the EU energy sector.

Expected results:
The planned outcome of the conducted research is a developed model for the evaluation of the impact of merger and acquisition transactions in the energy sector on sustainability, which will be used to assess the impact of mergers and acquisitions in the energy sector.
Project results will be published in 4 ISI WoS publications with IF and presented at 2 international conferences; there will be 2 foreign internships. There will be a possibility to widely apply research results both internationally to solve challenges in the energy sector and to evaluate merger and acquisition transactions at the corporate level. The developed assessment model will be used in further research, also for setting and evaluating political objectives, making specific decisions at the governmental or corporate level and contributing to the development of quantitative and qualitative assessment methods.

Project code: 09.3.3-LMT-K-712-19-0001
Contract start date: 01-09-2020

Amount of eligible budget: 84 957,74 EUR

Project is funded by the EU Structural Fund (European Social Fund).

2014-2020 ES fondų investicijų ženklasLietuvos mokslo taryba

Project Team

Name, surname Office phone. e-mail

LEI Representative
 
Karolis Andriuškevičius Karolis.Andriuskevicius@lei.lt